From 1797 until 1821, the monetary pressures of fighting a lengthy, expensive war against France led Britain to suspend convertibility – the exchange of paper credit for gold. The ensuing expansion of credit helped Britain’s banking system meet the demands placed on it by both a wartime government and a rapidly industrializing society. However, it was not without its problems: new £1 and £2 banknotes were hastily introduced, and were immediately the subject of enormous forgery . In 1801, 8,000 forged notes were detected . Improved note design reduced the rate of detected forgeries to about 3,000 per year. An 1812 Act of Parliament stipulated that only the Bank of England could use notes with white letters on a black background, and the country banks were given time to redesign and print their own notes. The plethora of transitory designs that emerged during this period provided excellent opportunities for forgery: over the period 1811–20, detected £1 note forgeries rose again, by more than 500 .
Counterfeiting on this scale threatened to destabilize Britain’s vulnerable wartime economy, but the official response was initially sluggish. As early as 1797, the Bank of England called for the public to submit anti-forgery schemes. Nearly 400 were received, of varying quality. The Bank of England’s Governor commented that many of them ‘…tended to embarrass and protract the subject rather than add any useful information or facilities in respect to it’ .
It took a political controversy to catalyse more effective anti-forgery measures: in 1817, it was revealed that 313 people had been sentenced to death for circulating forged notes . Investigation showed that all of the forgeries were produced by a maximum of only 10 note-printing plates . The vast majority of those executed were innocent people unable to differentiate between forged and genuine banknotes. Juries were becoming increasingly unwilling to convict when no really successful attempts to prevent forgery were being pursued.
There were two responses to this scandal. The first, and most influential, came from the Royal Society for the Encouragement of Arts, Manufactures and Commerce (better known today as the Royal Society of Arts), Britain’s pre-eminent body concerning the social consequences of scientific and technological change. The RSA undertook a detailed enquiry, the conclusions of which were clear: the quality of banknote design had to improve . Out of the many contributors to the RSA’s report, ‘…the greater number consider[ed] it of inferior execution, while by some it was regarded as of fair average quality’ – hardly a resounding endorsement . The RSA also commented that a population with very low literacy levels could not reasonably be expected to identify forged notes when they quite often passed undetected even by Bank of England inspectors . Its recommendations were that forgery could not be halted, but that it could be made much more difficult. Doing this would require a ‘multi-media’ solution combining a number of techniques in a single banknote design .
The second response to the question of reducing forgery came in the form of a Royal Commission, established in April 1818. The Commission’s recommendations have been assessed as ‘very flimsy’ . Perhaps its greatest significance came in giving a broad oversight of technical solutions to forgery to a small number of people – of particular significance to this paper, they included Sir William Congreve. Congreve’s work will be discussed in the next section.