20 things you never knew about Scottish money

MONEY, never got enough of it, can’t seem to hold on to it and losing it can make grown men – and women – weep. Now the pound in our pocket is the subject of hot debate, as the independence spotlight shines on just what we might end up using to buy our weekly groceries should Scots opt to vote Yes next year.

Will it be Pounds Sterling? Nope, says George Osborne. Will it be euros? Well we might need to ensure we’ll actually be members of the European Union for that to happen. How about Pounds Salmond?

While the Nationalists argue we’d simply form a currency union with the rest of the UK, perhaps a return to groats, ducats and bawbees would be a much 
simpler solution.

So, with an independent Scotland’s potential currency up for debate, it might pay to be armed with a little knowledge. Where did our money actually come from? Which Scots author saved the pound? And, incidentally, is any of it actually legal tender?

Indeed, the only thing we can’t tell you is how to go about actually making more of the stuff . . .

Scots hold the honour of being first in Europe to successfully issue paper money. The Bank of Scotland led the way, with its first bank notes becoming available in 1696, just a year after the bank was founded. Notes were for set denominations and were redeemable for cash on demand. The bank’s first pound note was issued in 1704. The Royal Bank of Scotland issued six different values of notes the year it was established, 1727.

Had things been different and the Act of Union never taken place, chances are we’d all be counting up our Pounds Scots, checking the exchange rate and trying to figure out how many Pounds Sterling they might buy us. The Pound Scots was the nation’s own currency before the Act of Union in 1707. There were 12 Pound Scots to a Pound Sterling.

More than 80 different banks have placed their notes into circulation in Scotland since 1696. Banknotes issued by the Union Bank of Scotland, North of Scotland Bank, Commercial Bank of Scotland, the British Linen Bank – among others – are collectors’ items. That said, should you happen across a Union Bank of Scotland note down the sofa, the present-day banks will honour them.

Ever tried to pass off a Scottish note to a reluctant English shopkeeper only to be told they are not legal tender? Well, they might have a point . . . Scottish banknotes are not legal tender, even here in Scotland. But then, neither are Bank of England notes. Legal tender is defined as a means of payment that should not be refused by a creditor in satisfaction of a debt. In Scotland the only currency carrying legal tender status for unlimited amounts are the £1 and £2 coins. Scots notes have only been legal tender in Scotland for the duration of the two world wars when emergency legislation was introduced, legislation which was rescinded at the end of both wars.

Just be grateful we have paper notes in our wallets, it’s much easier to carry around than the preferred currency of some nations. The earliest known currency is the cowrie shell used in China around 4000 years ago and still being used by some African countries in the early 20th century. One of the longest and most unusual forms of cash was the red feather coil money of Santa Cruz. Each coil was nine metres long and would take a lone craftsman around a year to produce. There are some, of course, who may prefer the Nigerian approach to currency – the country used gin as money until 1914.

Before notes, of course, we jiggled coins in our pockets. But because the Scottish coinage was quite erratic the coins in question were often Dutch, Flemish or French. The penny was the first Scottish coin to be made in around 1136 when King David I (1124-1153) captured the mint in Carlisle. It remained the only coin made in Scotland for nearly 150 years – which meant it had to be physically chopped in half or quarters to pay for smaller purchases. Eventually halfpennies and farthings (worth a quarter penny) were introduced around 1280, an innovation of Alexander III.

The very first coins were minted around 2600 years ago in Lydia, Greece and were made from electrum, a mixture of gold and silver. Heavy iron coins in China prompted the first use of paper money in the 9th century, a much lighter alternative. A shortage of coins in North America in the 18th century led to the use of buckskins instead. The state of Franklin (now known as Tennessee) paid their officials’ salaries in deer skins – the Governor received 1000 skins per year, and the Chief Justice 500. The word “bucks” remains in the American language today as the slang for dollar.

Our first banknotes were issued bound together in chunky books, similar to a chequebook. They were not perforated, which meant the bank cashier had to cut them out, often using a knife or scissors. Tearing them left a ragged edge, handy should anyone doubt their authenticity, as the ragged edge could be compared with the remaining page in the book to clarify they were not forgeries.

Forgery was a particular problem because notes were so simple in their design. Eventually water-marked paper, embossed bank seals, and a signature of the cashier all helped deter the fraudster but sometimes to no avail. Punishment was a better deterrent, amputation of hand and, or, tongue was one, but there was another, more final, reason not to fall into temptations: banknote forgery was a capital offence until 1832. In 1726 Edinburgh bookbinder John Currie was caught having created his own 20 shilling notes. His punishment included having his ear nailed to the door of the Tron Kirk.

Early notes were printed in black only. However the Royal Bank of Scotland pioneered the use of colour in 1777, with a blue rectangle and the words “one Guinea” plus an image of the King’s head in red. However colourful notes did not come into wide scale use for nearly a century after that. Banknotes were originally printed on one side only.

Today’s notes are printed in large sheets of up to 40 notes. Security features on modern notes include metallic security thread, holograms, watermarks, microprint and see-through features. In 2011 the Bank of England introduced a new £50 note with eight key security features, the main one of them being a “Motion Thread” which features semi-translucent windows woven into the note that show the £ symbol and the number 50 when held up to the light.

One of the earliest recorded British bank robberies took place just off the Royal Mile in 1806. William Begbie, a porter for the British Linen Bank, was stabbed and robbed of £4392 of the institution’s cash in Tweeddale Close – now Tweeddale Court. Today, exploding dye packs – which cover stacks of notes and anyone nearby in red dye – help prevent stolen bills from entering circulation.

Robert Burns once wrote a poem on the back of a Bank of Scotland Guinea note, describing money as the “Fell source o a’ my woe and grief” and blaming his lack of it for losing “his lass”.

In 1826, Novelist Sir Walter Scott led a campaign to save the Scottish £1 note. He argued against Westminster’s plans to outlaw banknotes for under £5 and put pen to paper in a string of letters to the Edinburgh Weekly Journal, venting his rage and encouraging others to join the protest. His campaign gained momentum and eventually the government had to give way and allow the Scottish banks to continue printing £1 notes. Scott is still honoured on Bank of Scotland notes today.

Getting change for your notes in the 18th and early 19th centuries was often a problem. There were times, for example, when £1 notes were torn into halves and quarters and were accepted as the equivalent of 10 shillings (50p) or 5 shillings (25p) in coins. Getting an overdraft from the bank was just as tricky – the first overdraft was secured by a William Hogg, which he received from the Royal Bank of Scotland in 1728, when he was given £1000 – the equivalent of £66,000 today.

Today three banks issue notes in Scotland: Bank of Scotland, Royal Bank of Scotland and Clydesdale Bank. Only Royal Bank of Scotland still issues £1 notes – the Bank of Scotland, the Clydesdale Bank and the Bank of England all ceased to print them in 1988, arguing that their short life span of just six months made them uneconomical. There are no Welsh banknotes, however four banks in Northern Ireland produce their own notes. Jersey and Guernsey and the Isle of Man issue their own sterling banknotes, as do the governments of the Falkland Islands, Gibraltar and St Helena.

The use of the word “pound” in terms of currency can be traced back to Anglo-Saxon times, when sterlings – or silver pennies – were the main currency. Two hundred and 40 sterlings weighed a pound. The shilling, 20 of which made up a pound, was introduced by William the Conquerer. Closer to home, old Scots names for coins include Bodle, Turner, Groat, Bawbee and Plack.

Edinburgh man John Law is known as “the father of paper money”, one of the world’s first self-made millionaires – he’s even said to have helped create the word. He also holds the dubious honour of being the first self-made millionaire to lose his entire fortune when his ill-judged dabbling in American investments sparked another first, the world’s first stock market crash. He had pushed for the creation of a national bank for Scotland in the early 18th century but when his ideas were rejected he left for France where he became Controller General of Finances and introduced share dealing in national assets to ease the nation’s debts. He pioneered the use of paper money, but his attempts to sell shares in trading ventures in Mississippi backfired and triggered the first shares crash.

Old banknotes don’t fade away, they are recycled. There are around 2.8 billion bank notes in circulation in the UK but they have limited lifespan. In the past, notes that had reached the end of their useful life were thrown into the furnace in quantities of upwards of £1m at a time. A new environmentally aware age, however, sees notes granulated and the paper recycled.

Finally, how nice it would be to have a million quid to spare. Higher value notes are regularly used within the banks, a special £1m note and even £100m notes are used within the banking system. They have no particular design features and are the equivalent of an IOU between banks. In 2008 a rare £1m note issued by the Treasury and dated 1948 was sold at auction for £70,000. One of only nine ever printed, it had been issued under a programme of post war funding.

How much is the UK worth?

According to a study by the Office for National Statistics, admittedly before the financial crisis, the answer was £5000bn or five trillion pounds. The total included all the buildings, bridges, factories, cars, even food in supermarkets

The Bank of Scotland’s Museum at The Mound is dedicated to the history of money. Ever wondered what £1 million looks like? You are able to view it here. Go to www.museumonthemound.com for the exhibit’s opening times and further details