The History Of The British Pound
This chapter is devoted to the manufacture of coins and banknotes with explanations about:
- Minting coins through the ages
- A step-by-step guide to coin-minting nowadays
- What happens to old coins
- How Bank of England notes were made in the past
- The process of printing banknotes nowadays
- The 3 stages of printing notes
- Who distributes banknotes
- What the Bank of England does with the money raised from selling banknotes
- What banks and retailers do with the money they make
- How banknotes are checked and sorted and what happens to old banknotes
- What to do with a ripped note and demonetised notes
Minting coins through the ages
Have you ever wondered how our coins and banknotes are made and distributed? In this chapter, we briefly describe how our money used to be made before explaining the modern methods of producing it and how far new technology plays a role.
Hand-hammering of coins
Until the 1660s, the majority of coins in Britain were produced by hand. The craftsmen (also known as moneyers) would use different tools to mint, shape and engrave the coinage.
The coins would be struck between 2 iron dies; the bottom pile had a spiked end and would be driven firmly into a block of wood, the blank and the upper die (or trussel) would be placed on top. Blows from a hammer would cause the coin to be impressed with both the obverse and reverse designs.
It is estimated that the hand-hammering of coins was a 16-stage process from melting the ingots to the coining process itself.
The shaping of the coin would be done with other tools such as mallets, tongues and shears whilst small chisel-like punches would be used to do the engraving like the monarch’s portrait. All in all, it is estimated that it was a 16-stage process from melting the ingots to the coining process itself.
The mechanisation of coin-minting
The mechanisation of coin-minting occurred in the early 1660s. The ‘fillets’ of cast metal would be reduced to the correct thickness for the coin by a horse-drawn rolling machine and then blanks were produced by a small fly press. The striking of blanks was done by the power of a simple screw-press, which brought the upper die down onto the blank. This press was set into motion by workmen pulling on a long horizontal bar. The work of minting was no longer a skilled job but just required brute strength. In this way, a coin could be struck every 2 seconds. The most dangerous job was the workman who had to flick away the struck coin and insert a fresh blank – he had to be nimble and fast to keep his fingers away from the moving parts.
Coin-minting in the age of steam
When the new Royal Mint started operation in 1810, it was equipped with the latest steam-powered machinery developed and sold by Matthew Boulton. You may recognise the name from the most recent £50-banknote where he appears with his partner James Watt.
The factory – with its fly-wheels and shafting – illustrated how coin-minting had entered the Industrial Age. The Mint’s massive presses, separated by oak columns, were operated by a 10-horsepower engine and were capable of minting 60 coins a minute.
At the end of the century, the Mint was totally reconstructed and Boulton’s machines were replaced with smaller presses from Heaton’s of Birmingham. They weren’t much faster but their main benefit was that they were much quieter. After nearly a century (1907), electric-powered machines replaced steam.
Minting coins in the 20th century
Instead of hand-engraving a design at normal size into steel, an artist would prepare a low-relief plaster model which was 150-250mm in diameter. A mould taken from the plaster model would be electroplated with nickel and copper and be reproduced in metal. This electrotype (as it was called) would then be mounted on a reducing machine and the details would be scanned by a tracer. The movements would be copied by a rotating cutter at coin size into a block of steel. The resulting master punch would be used to make coining dies. This process continued till the early years of the 21st century when it was replaced by computer technology.
Until the 17th century, coins were made by hand and coin-minting involved a 16-stage process from beginning to end.
The first coin-minting machines uses horses; workers were no longer craftsmen as the work required brute strength and/or speed.
The steam-powered machines of 1810 were replaced by electric-powered ones nearly a century later.
Producing an electrotype allowed coining dies to be reproduced accurately and in fine detail.
Making coins nowadays
At its 35-acre site in South Wales, the Royal Mint is able to produce enough coins not only for the UK but also for other countries and produces medals and commemorative/ceremonial coins for the domestic market. Let’s have a closer look at how coins are minted from the original smelting to the finished coins.
Step 1: Making the strip
For cupro-nickel and nickel-brass coins, the alloy is poured into the casting equipment, which is a furnace able to reach temperatures of 850 degrees centigrade. This metal is set solid between two slabs of water-cooled graphite, which produces an endless strip of metal 16mm thick. As this is far too thick for coins, the strip is then squeezed between rollers of high pressure to create the required thickness of 4mm.
Step 2: Making blanks
Before coins can be struck, the metal must be malleable so it’s heated in an annealing furnace of 950 degrees centigrade. The blanking press goes up and down 4-5 times a second so every machine is capable of producing 6000 blanks a minute. As the coins are discoloured by the heat, they’re washed in a cauldron of sulphuric acid and ball bearings to make them shine again. After 20 minutes, the acid is washed off, the blanks are placed in a drying chamber and the pattern is pressed into the edge of the coins.
Step 3: Metal plating for steel coins
As the Royal Mint doesn’t possess the smelting facilities, the steel for coins is made elsewhere and transferred to the Mint. After the blanks are punched out, they go through the plating lines where they are cleaned, electroplated with a thin layer of copper, nickel or brass and then are rinsed. Only plated-steel coins need to go through this process.
Step 4: Design and die-making
The engraving department of the Royal Mint produces relief patterns and designs from the coins. From the initial drawing, the engraver cuts into the plaster. A ruby-tipped probe scans the original plaster model and makes a digital recording of every movement. This recording is stored on the memory banks of the computer using XYZ co-ordinates and if necessary, it’s modified by a CAD (Computer-Assisted Design) package. The record of the scan is used by the cutting machines: either the rough cutter or the fine cutter (which is used for detail).
Step 5: Striking the coins
Hydraulically-controlled equipment is used to strike the coins with a pressure of 60 tons. As the blank has pressure applied from beneath and is pushed upwards, it allows both sides of the coins to be minted at the same time. A piece of machinery like this is able to mint 25,000 coins in an hour.
Step 6: Distributing the coins
The finished coins are wrapped and stacked ready for distribution to banks and shops. Unlike paper banknotes, a coin lasts much longer and only need to be recalled when the coin’s demonetised or changed in shape, size or composition.
What happens to old coins?
The round £1 coin will be demonetised after October 2017 and some of the old ones will be melted down to produce the new 12-sided £1 coins. Unlike the Bank of England, the Royal Mint doesn’t buy old coins once they’re no longer legal tender.
If you do find old coins, it’s worth checking online and/or with the British Numismatic Trade Association to see if the coins you have are valuable. Age isn’t always a guarantee you’ll get a high price since rarity value is the key factor in determining the price of a coin.
In order to make coins, strips of metal are produced and then made thinner by using rolling machines.
Blanks are made by a blanking machine though steel-plated coins also have to go through a series of baths to be electroplated.
A recording of the die is stored electronically to be used by the cutting machines and then coins are struck using hydraulic pressure.
Coins are wrapped and stacked before being distributed.
Old coins might be melted down to create new coins but demonetised coins aren’t purchased by the Royal Mint.
Making Bank of England banknotes
The first banknotes in the 18th century used to be written by hand by the cashier at the Bank of England. They were made on plain cotton paper, with black ink and were printed on only one side. Hence, their name – ‘white notes’. It wasn’t until 1853 that the banknotes were printed but they still had to be countersigned by one of the cashiers in the Bank of England. In 1870 the job of signing banknotes was taken over by the Chief Cashier.
The first coloured banknote, printed on both sides, was issued by the Bank of England in 1928. However, not all notes were produced in this way and the ‘white notes’ continued to be used until the 2nd World War. Made of rag paper, these notes had black printing on one side and carried an engraving of Britannia. The first multi-coloured and double-sided five-pound note wasn’t produced until 1961. It was only just before decimalisation that banknotes began to resemble the notes that we all use and take for granted today. In 1970 the first in the Bank of England series honouring famous Britons was produced – the £20 note featuring William Shakespeare.
What are banknotes made from?
Apart from the new polymer banknotes, the other notes are made by a specialist paper manufacturer. This paper is made of cotton fibre and linen rag, which makes the paper tougher and more durable than wood pulp paper. Water is used to break the cotton down into its individual fibres, which is then re-formed into reels of paper of the necessary quality. The watermark is engraved in wax and along with the metallic (security) thread is incorporated into the paper during its manufacture.
How are the images for the banknotes prepared for printing?
Of course there’s a certain amount of secrecy when it comes to describing the printing process of banknotes since one of the Bank of England’s main concerns is to make it as difficult as possible to counterfeit them. For example, the specialised inks (approximately 85 different shades for the 4 denominations of banknotes) are manufactured especially on site.
A number of techniques are used to prepare the images for printing. Some images are engraved by hand onto the metal plates, some are drawn onto film by a laser beam whilst others are made using a digital CAD (Computer-Assisted Design) system. Once the designs are ready, they are copied many times onto printed plates to be used by the printing presses.
The first banknotes were handwritten and weren’t printed till the mid-19th century but still had to be countersigned by a cashier.
Double-sided multi-coloured banknotes weren’t issued until the 1960s and the first famous Briton to feature on a note was Shakespeare a decade later.
Paper banknotes are made of cotton fibre/linen rag and some of the security devices are incorporated during the manufacture of this specialised paper.
The specialised ink is prepared on site at De La Currency and different techniques are used to prepare the images for printing.
The 3 stages of printing banknotes
It would be a mistake to think that the printing of banknotes is done in one single procedure because different aspects of the notes are printed in different ways. Let’s look at how each stage of the procedure is done.
It would be a mistake to think that the printing of banknotes is done in one single procedure because different aspects of the notes are printed in different ways.
Step 1: Offset litho
Printing plates transfer ink to the paper by means of an intermediate offset roller. Offset printing means that the paper goes through a number of different plates which have different colours and these are superimposed to produce a highly-defined clear image. Most of the printing of banknotes is done in this way except for the portrait of the Queen, the lettering and the numbering.
Step 2: Intaglio
In this procedure, the ink rests in grooves engraved in the printing plate. When the plate comes into contact with the paper, ink is forcibly drawn from the plate onto the paper under very high pressure. This method is used to add the raised print and also to add the Queen’s portrait.
Step 3: Letterpress
The ink is transferred onto the raised letters and the serial number of the note are printed onto the paper.
Who distributes new banknotes?
The Bank of England is only concerned with the issue of new notes and the withdrawal/destruction of demonetised or worn banknotes but isn’t responsible for the distribution of notes.
Since 2001, the responsibility for distributing new banknotes lies with members of the NCS (Note Circulation Scheme). These wholesale cash operators give out the notes in response to requests from financial institutions and retailers. The NCS purchases the notes at face value from the Bank of England and then sells them to businesses who need them adding a fee for their processing and delivery costs.
What does the Bank of England do with the money from selling new notes?
The money which the Bank of England receives from members of the NCS is invested, usually in assets which pay interest such as UK government bonds. It then deducts the printing expenses from the income from these assets. (This is called seigniorage). Let’s take an example, in 2014-15 the Bank of England made a total of £576 million, £70 million was deducted for printing costs and the remaining £506 million was paid to HM Treasury.
What do banks and retailers do with the money they take?
All financial institutions and retailers return excess notes to the NCS members. It isn’t worth them keeping the extra notes. Firstly, because they can’t earn interest on money when it’s being stored and secondly because they may not have enough storage space or don’t wish to pay extra for the necessary security measures. When notes are returned to the NCS members, they’re checked for authenticity and also that they’re in good enough condition for general circulation.
Some banknotes are kept by NCS customers; either to use in their tills or in ATMs. This is called ‘local recycling’ and there are a number of measures put in place to protect consumers. Since July 2013, all banknotes which are re-used in this way must be checked by a machine approved by the Bank of England to ensure the notes are genuine. (This is the Code of Conduct for the Authentication of Machine-Dispensed Notes).
How are banknotes checked and sorted?
The checking of banknotes is now mechanised by machines which are capable of sorting 1,800 banknotes a minute. The Bank of England supplies examples of counterfeit notes so that the machines can be calibrated accordingly. Any unfit notes (because they’re dirty, ripped or generally tatty) must be withdrawn.
Around 85-97% of notes are judged both genuine and in good condition although the old (paper) £5 note always used to show the most wear and tear.
What happens to worn banknotes?
Every year, 700 million banknotes are judged to be too old, worn or dirty to remain in circulation so they’re returned to the Bank of England to be destroyed, who buy them from NCS members at face value.
Up until 1990, old banknotes used to be incinerated in the Bank headquarters itself to provide fuel for heating. However, since they changed their heating system in the early 2000s, banknotes are now sent for composting treatment, to improve the soil for agriculture. Money may not grow on trees but money can be used to make trees grow!
Before adopting polymer banknotes, the Bank of England was concerned that they should be easy to recycle. When the new fivers need to be destroyed, they’ll be turned into pellets and will be used to make new plastic items.
What happens if I have a ripped banknote?
If you have a damaged, mutilated or contaminated banknote, it can be sent to the Bank of England along with the Mutilated Notes claim form (Form BEMN), which you can download from their website. Every year, the Bank receives approximately 23,000 applications for such banknotes (worth about £11 million). Such banknotes will be reimbursed at their face value but the Bank’s main concern is that it doesn’t pay out twice for the same note so you usually need the physical evidence of at least half of the note.
What can I do with demonetised banknotes?
The Bank of England will always pay out the face value of any old banknote. Don’t expect it to be increased to make allowance of inflation though.
Different parts of banknotes are printed using different printing techniques.
The Bank of England sells banknotes to members of the NCS who distribute the notes.
The money the Bank earns is invested before being returned to the Treasury (after subtracting the printing costs).
Excess banknotes are returned to NCS and are checked for authenticity as well as their condition – tatty notes are sold back to the Bank to be destroyed.
Ripped banknotes can be redeemed and the Bank of England will also buy back any notes at face value – however old they are.