Learn About: Banknotes

If you’re not aware that banknotes have a history, you’re not alone. While economics and money are topics that appear in the news time and again, we rarely stop to consider the material part of our monetary history.

Even when money has been studied, banknotes have generally taken a back seat; famous and often ancient coins end up in museums while banknotes tend to end up stashed away in draws. Historic banknotes from Europe, the US and the rest of the world represent more than just an outdated means of exchange, though. They’re literally printed with our favourite bits of history and they themselves often have a story to tell.

European Banknotes

Since the first notes were circulated in 2002 much of Europe has adopted, or is seeking to adopt, the currency of the Eurozone known as the Euro. Many will remember a time when there was much greater diversity of European paper money and old banknotes have become evocative of a national past. Turn the clock bank 180 years, however, and paper money was regional as well as national; before 1844 in the UK, for example, a plethora of regional banks issued their own pound sterling notes, usually with their own distinctive designs. Even today, there are three different Scottish banks which produce their own banknote designs and many others within British territories.

Ultimately, the economic necessities of central banking would make regional banknotes less viable as more and more they became the subjects of governmental policies. There is a long tradition of European governments using paper currency to influence their finances, usually by controlling supply – by printing money.

One of the most radical, and earliest, examples of this took place during the revolutionary wars between France under revolutionary government and its opponents, most notably Great Britain. ‘Assignats’ were French banknotes backed by the land the state had confiscated from the Catholic Church and were the primary effort the government to stave off bankruptcy. The response of the British was to print their own assignats and smuggle them into the west of the country through the Vendeé rebels who were waging war against the government.

US Banknotes

The best forgeries of banknotes were often produced not by criminals and gangs but, like in the case of French assignats, by governments at war. The same strategy was used by the British only a couple of decades earlier in the Revolutionary War with the USA. Criminal activity was kept comparatively minor because the punishments for forging banknotes were and are often very severe; for example, some of the earliest colonial American paper banknotes bore the phrase “to counterfeit is death”1.

Currency, and banknotes in particular were also a weapon of the American Civil War; the Union’s printing technology greatly outweighed that of the Confederacy, leading not only to better counterfeits but also to their own new forms of money called demand notes and United States banknotes in the early 1860s – the first to be known as “greenbacks”. The difference between these two was that US banknotes (also known as legal tender notes) were not ‘redeemable’, that is, they didn’t just stand for hard currency but were currency in their own right. This was highly controversial for the time for Congress and succeeded only because it was passed as a wartime measure.

Currency in the US wasn’t streamlined, however, until the 20th century when, under FD Roosevelt and later Lyndon B Johnson, the gold and silver backing off all currency was removed, leaving little but history to distinguish US banknotes from the newer banknotes issued by the Federal Reserve.

World Banknotes

So far, we have only scratched the surface of the variety that can be found in paper money. World banknotes have a longer history that has been appreciated in Europe since the travels of Marco Polo in the 13th century. The 24th chapter of Polo’s second book details the marvel of paper money, how “it must equal in amount all the treasure in the world” and “nobody … dares to refuse them on pain of death”.

In reality, the Chinese had been using ‘banknotes’ as early as the 7th century (1000 years before they were properly introduced in Europe), although they looked nothing like what we’d consider a modern, decorated banknote. Early notes are, of course, also almost universally museum pieces.

World banknotes you’re more likely to find today often have their origins in the 20th century but are no less interesting for it, particularly in their links to imperial history. Many countries today have adopted their own ‘dollars’ in favour of the imperial currencies of their past, such as pound sterling or the French franc.

Some countries adopted the printing of their own paper money under the influence of European empires, often having their banknotes printed in places like the UK, bearing their own national figures and heritage. This has led to a huge variety of designs, many of which were only printed in small numbers or not at all. Often, from the point of view of a collector, the rarer and more obscure a note, the more interesting it is!