Wednesday March 10, 2021 Smile of the Day: Paper Money (Banknotes)
On this Day:
In 1862, the USA issued the first paper money in the form of $5, $10, $20, $50, $100, $500 and $1000 notes. However, these notes were not the first paper money.
A banknote (often known as a bill (in the US and Canada), paper money, or simply a note) is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender (usually gold or silver coin) when presented to the chief cashier of the originating bank. These commercial banknotes only traded at face value in the market served by the issuing bank. Commercial banknotes have primarily been replaced by national banknotes issued by central banks or monetary authorities.
National banknotes are often – but not always – legal tender, meaning that courts of law are required to recognize them as satisfactory payment of money debts. Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. This practice of “backing” notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Today, most national currencies have no backing in precious metals or commodities and have value only by fiat. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.
In China during the Han dynasty, promissory notes appeared in 118 BC and were made of leather. Rome may have used a durable lightweight substance as promissory notes in 57 AD which have been found in London. However, Carthage was purported to have issued bank notes on parchment or leather before 146 BC. Hence Carthage may be the oldest user of lightweight promissory notes. The first known banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century. Its roots were in merchant receipts of deposit during the Tang dynasty (618–907), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the Yuan dynasty (1271–1368), banknotes were adopted by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 13th century by travelers such as Marco Polo, with European banknotes appearing in 1661 in Sweden.
Counterfeiting, the forgery of banknotes, is an inherent challenge in issuing currency. It is countered by anti counterfeiting measures in the printing of banknotes. Fighting the counterfeiting of banknotes and cheques has been a principal driver of security printing methods development in recent centuries.
Paper currency first developed in Tang dynasty China during the 7th century, although true paper money did not appear until the 11th century, during the Song dynasty. The usage of paper currency later spread throughout the Mongol Empire or Yuan dynasty China. European explorers like Marco Polo introduced the concept in Europe during the 13th century. Napoleon issued paper banknotes in the early 1800s. Cash paper money originated as receipts for value held on account of “value received”, and should not be conflated with promissory “sight bills” which were issued with a promise to convert at a later date.
The perception of banknotes as money has evolved over time. Originally, money was based on precious metals. Banknotes were seen by some as an I.O.U. or promissory note: a promise to pay someone in precious metal on presentation (see representative money). But they were readily accepted – for convenience and security – in London, for example, from the late 1600s onwards. With the removal of precious metals from the monetary system, banknotes evolved into pure fiat money.
When paper banknotes were first introduced in England, they resulted in a dramatic rise in counterfeiting. The attempts by the Bank of England and the Royal Mint to stamp out currency crime led to new policing strategies, including the increased use of entrapment.
The characteristics of banknotes, their materials and production techniques (as well as their development over history) are topics that normally aren’t thoroughly examined by historians, even though now there are a number of works detailing how bank notes were actually constructed. This is mostly due to the fact that historians prioritize the theoretical understanding of how money worked rather than how it was produced. The first great deterrent against counterfeiting was the death penalty for forgers, but this wasn’t enough to stop the rise of counterfeiting. Over the eighteenth century, far fewer banknotes were circulating in England compared to the boom of bank notes in the nineteenth century; because of this, improving note-making techniques wasn’t considered a compelling issue.
In the eighteenth century, banknotes were produced mainly through copper-plate engraving and printing and they were single-sided. Notes making technologies remained basically the same during the eighteenth century. The first banknotes were produced through the so-called intaglio printing, a technique that consisted of engraving a copper plate by hand and then covering it in ink to print the bank notes. Only with this technique it was possible, at that time, to force the paper into the lines of the engraving and to make suitable banknotes. Another factor that made it harder to counterfeit banknotes was the paper, since the type of paper used for banknotes was rather different from the paper commercially available at that time. Despite this, some forgers managed to successfully forge notes by getting involved with and consulting paper makers, in order to make a similar kind of paper by themselves. Furthermore, watermarked paper was also used since banknotes first appeared; it involved the sewing of a thin wire frame into paper mould. Watermarks for notes were first used in 1697 by a Berkshire paper maker whose name was Rice Watkins. Watermarks, together with a special paper type, were supposed to make it harder and more expensive to forge banknotes, since more complex and expensive paper making machines were needed in order to make them.
At the beginning of the nineteenth century (the so-called Bank Restriction Period, 1797-1821), the dramatically increased demand of bank notes slowly forced the banks to refine the technologies employed. In 1801, watermarks, which previously were straight lines, became wavy, thanks to the idea of a watermark mould maker whose name was William Brewer. This made even harder the counterfeiting of bank notes, at least in the short term, since in 1803 the number of forged bank notes fell to just 3000, compared to 5000 of the previous year In the same period, bank notes also started to become double-sided and with more complex patterns, and banks asked skilled engravers and artists to help them make their notes harder to counterfeit (episode labelled by historians as “the search for the inimitable banknote”).
The ease with which paper money can be created, by both legitimate authorities and counterfeiters, has led both to a temptation in times of crisis such as war or revolution to produce paper money which was not supported by precious metal or other goods, thus leading to Hyperinflation and a loss of faith in the value of paper money, e.g. the Continental Currency produced by the Continental Congress during the American Revolution, the Assignats produced during the French Revolution, the paper currency produced by the Confederate States of America and the individual states of the Confederate States of America, the financing of World War I by the Central Powers (by 1922 1 gold Austro-Hungarian krone of 1914 was worth 14,400 paper Kronen), the devaluation of the Yugoslav Dinar in the 1990s, etc. Banknotes may also be overprinted to reflect political changes that occur faster than new currency can be printed.
In 1988, Austria produced the 5000 Schilling banknote (Mozart), which is the first foil application (Kinegram) to a paper banknote in the history of banknote printing. The application of optical features is now in common use throughout the world. Many countries’ banknotes now have embedded holograms.
In 1983, Costa Rica and Haiti issued the first Tyvek and the Isle of Man issued the first Bradvek polymer (or plastic) banknotes; these were printed by the American Banknote Company and developed by DuPont. These early plastic notes were plagued with issues such as ink wearing off and were discontinued. In 1988, after significant research and development in Australia by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Reserve Bank of Australia, Australia produced the first polymer banknote made from biaxially-oriented polypropylene (plastic), and in 1996, it became the first country to have a full set of circulating polymer banknotes of all denominations completely replacing its paper banknotes.
Since then, other countries to adopt circulating polymer banknotes include Bangladesh, Brazil, Brunei, Canada, Chile, Guatemala, Dominican Republic, Indonesia, Israel, Malaysia, Mexico, Nepal, New Zealand, Papua New Guinea, Paraguay, Romania, Samoa, Singapore, the Solomon Islands, Thailand, Trinidad and Tobago, the United Kingdom, Vietnam, and Zambia, with other countries issuing commemorative polymer notes, including China, Kuwait, the Northern Bank of Northern Ireland, Taiwan and Hong Kong. Another country indicating plans to issue polymer banknotes is Nigeria. In 2005, Bulgaria issued the world’s first hybrid paper-polymer banknote.
Polymer banknotes were developed to improve durability and prevent counterfeiting through incorporated security features, such as optically variable devices that are extremely difficult to reproduce (per Wikipedia).
First, a Story:
Puns about money are completely priceless.
Second, a Song:
We could have a great debate about which is the greatest song about money, but my bet is on “Can’t Buy Me Love” by the Beatles.
“Can’t Buy Me Love” is a song by the English rock band the Beatles that was released in March 1964 as the A-side of their sixth single. It was written by Paul McCartney and credited to the Lennon–McCartney partnership. The song was included on the group’s album A Hard Day’s Night and was featured in a scene in Richard Lester’s film of the same name. The single topped charts in the United Kingdom, the United States, Australia, Ireland, New Zealand and Sweden. In the UK, it was the fourth highest selling single of the 1960s.
While in Paris, the Beatles stayed at the five star George V hotel and had an upright piano moved into one of their suites so that songwriting could continue. It was here that McCartney wrote “Can’t Buy Me Love”. The song was written under the pressure of the success achieved by “I Want to Hold Your Hand” which had just reached number one in America. When producer George Martin first heard “Can’t Buy Me Love” he felt the song needed changing: “I thought that we really needed a tag for the song’s ending, and a tag for the beginning; a kind of intro. So I took the first two lines of the chorus and changed the ending, and said ‘Let’s just have these lines, and by altering the second phrase we can get back into the verse pretty quickly.'” And they said, “That’s not a bad idea, we’ll do it that way”. The song’s verse is a twelve bar blues in structure, a formula that the Beatles seldom applied to their own material.
When pressed by American journalists in 1966 to reveal the song’s “true” meaning, McCartney stated that, “I think you can put any interpretation you want on anything, but when someone suggests that ‘Can’t Buy Me Love’ is about a prostitute, I draw the line.” He went on to say: “The idea behind it was that all these material possessions are all very well, but they won’t buy me what I really want.” However, he was to comment later: “It should have been ‘Can Buy Me Love'” when reflecting on the perks that money and fame had brought him.
Ah well then. Christopher Marlowe did say: “Money can’t buy love, but it improves your bargaining position.” So here are The Beatles in a digitally remastered version of “Can’t Buy Me Love”. I hope you enjoy this!
Thought for the Day:
“I spent a lot of money on booze, birds and fast cars. The rest I just squandered.” – George Best
Have a great day!
© 2021 David J. Bilinsky and Colleen E. Bilinsky