The History Of The British Pound
This chapter is all about the pound in Northern Ireland as well as other parts of the globe where the currency is sterling. You’ll be able to learn about:
- Early coinage in Ireland (up to the 15th century)
- Irish coinage after 1460 – The Celtic harp and ‘gun money’
- Independence for the South
- Issuing of banknotes in Ireland
- The confusion over legal tender
- Whether Northern Irish banknotes are legal tender
- The sterling of the Crown Dependencies and British Overseas Territories
- The currency of the Crown Dependencies
- The Channel Islands
- British Overseas Territories
British currency in countries of the sterling zone
Compared to England, Wales and Scotland, the development of currency in Ireland was never so well-organised and perhaps that’s a reflection of the periods of political turmoil in the country itself. In this chapter we’ll trace the history of coins – and later banknotes – in Ireland before concentrating on Northern Ireland and the note-issuing powers of Irish banks nowadays. Are they legal tender in Great Britain or not?
In the second part of the chapter, we’ll look at the use of the pound sterling in Crown Dependencies and British Overseas Territories. We’ll give a brief history of the currency in each place before giving interesting facts about each locally-produced pound currency. Do you know which island has produced a square-shaped coin or why the Queen doesn’t wear a crown on Manx coins?
Early coinage in Ireland (up to 15th century)
The Vikings under Sihtric III (also known as Silkbeard) were the first to hand-hammer coins in Ireland in the 10th century. Before this date, a variety of Anglo-Saxon, Western and even Islamic coins had been in circulation. Over the next two decades, new coins were copies of those made by the English king, Ethelred II. However, after the Battle of Clontarf (1014), Irish coinage returned to earlier designs for a century. The same system as England was adopted (pounds, shillings and pennies) but over time, both the quality and weight of the coins decreased and the design became less legible.
During the 12th century Ireland was forced to cede power to the Normans and under King John, mints were created outside Dublin for the first time.
During the 12th century Ireland was forced to cede power to the Normans and under King John, mints were created outside Dublin for the first time. Irish coins were different from English coins in terms of inscription, weight and design and the monarch’s head was enclosed inside a triangle instead of a circle. As the power of the Normans waned, hardly any Irish coins were struck since Gaelic society didn’t view the minting of coins as a priority. Instead, they returned to the pre-10th century system in that coins were adopted from other countries.
Irish coinage after 1460 – The Celtic harp and gun money
In the 15th century a new coinage was struck for use in Ireland with mints working in Dublin and outside the capital. Reflecting the relative poverty of the country, the highest coin denomination was the groat (4d). In 1531 when Henry VIII was declared King of Ireland, a new series of coins were minted and for the first time the designs included the Celtic harp.
For the following two centuries of political unrest, coin-minting was an amateur affair. As it was mainly needed to pay soldiers, metal was just melted down and stamped with the date. Under King James II (in the late 17th century), they even melted down copper cannons and church bells to make coins (and that’s how it earned the name ‘gun money’). Seeing as the coins’ face value didn’t match their metal content, they had to be removed from circulation in 1690.
The Act of the Union with Britain in 1800 had no effect on Irish coinage until 1826 when Irish coins became valueless because of previous debasements. For the next century English sterling was used exclusively in Ireland.
Independence for the South
When the Free Irish State was established, a new coinage was established for the new state with new coins and banknotes but using the existing system of pounds, shillings and pennies. Originally called the ‘saorstat’ (1928), the Irish currency took the name of the Irish pound (or punt Eireann) in 1938. Despite independence, the Irish pound was pegged to sterling until 1979. Only when Eire adopted the euro in 2002 did its currency take a different path from that of the United Kingdom.
In Gaelic society, coin-minting wasn’t a priority so in the past Ireland used coins from other countries as currency.
Coins were made in low denominations and of poor quality metals, which reflected the poverty of the country.
Soon after the 1800 Act of the Union, Ireland adopted the sterling as currency.
After independence, Eire created its own currency (1928-2002) but this Irish pound was pegged to the pound sterling until 1979.
Issuing of banknotes in Ireland
The restrictions on the issuing of banknotes by provincial banks present in the 1844 Bank Charter Act made it clear that the Bank of England was slowly taking control as the government’s central bank. However, the case of both Scotland and Ireland presented a problem because they were so far from the seat of power. Amendments in successive legislation allowed Irish banks to continue to issue notes – notably the Banknotes (Ireland) Acts of 1845 and 1864.
Once the Republic of Eire declared its independence, legislation had to be amended to permit Northern Ireland to continue to print notes. This was reaffirmed in the Banknotes (Ireland) Act of 1928 and the first notes were issued a year later.
Originally 6 Irish clearing banks were allowed to print their own notes but mergers and acquisitions mean that it has now been retained by only 4: the Bank of Ireland, the Danske Bank (formerly the Northern Bank), the Ulster Bank and the First Trust Bank (formerly the Provincial Bank of Ireland and then the Allied Irish Bank). Before considering the notes of N. Ireland, let’s challenge a commonly-held belief.
Let’s clear up the confusion – What is legal tender?
The issue of legal tender is one which causes a great deal of confusion in the UK. Just because we have a legitimate currency in the sterling, this doesn’t mean that all payments are obliged to be paid using these coins/notes. Theoretically, you could pay in stones if you wanted but only on condition that the other party agrees. What legal tender basically means is that you can’t be sued for non-payment of a debt if you’ve offered to pay in legal tender. So, what’s the legal status of Northern Irish notes?
Are Northern Irish banknotes legal tender?
The situation in Northern Ireland is exactly the same as the legal position of notes in Scotland. Notes issued by the banks located in N. Ireland aren’t legal tender anywhere but can be viewed as promissory notes and as used and accepted as such. The days of the Restriction Period (1797-1821) when the Bank of England refused to honour its banknotes (as it was running out of gold because it had over-issued notes) are long over. The printing of banknotes isn’t done on a whim any more. Although the Bank of England’s monopoly doesn’t apply to N. Ireland, it acts as a regulatory and supervisory body making sure that all notes issued by banks there are backed up.
5 things you probably didn’t know about N. Irish banknotes
- Only 2 banks (the Bank of Ireland and the Ulster Bank) still issue £5-notes.
- The first commemorative N. Irish banknote was issued in November 2006 on the anniversary of the death of the footballer, George Best. Although a million were printed, they very quickly went out of circulation as people were keeping them as souvenirs.
- The Northern Bank produced the very first polymer banknote in the UK in 2000.
- Although the Danske Bank still honours the larger-denomination notes, notes worth more than £20 are slowly being withdrawn from circulation.
- The banknotes of the Danske Bank honour the contribution of notable Irish people associated with industry: J.B. Dunlop (of tyre fame), Harry Ferguson (famous for developing the modern tractor), Sir Samuel Cleland Davidson (an inventor and engineer) and Sir James Martin (engineer). How many have you heard of?
Legislation in the 19th century allowed banks in Ireland to have note-issuing powers, mainly because of the distance from London.
Despite some people’s misconceptions about the term, legal tender means that you can’t be sued for non-payment of a debt if you offer legal tender; not that using legal tender is compulsory for purchases.
Like Scotland, the banknotes of Northern Ireland aren’t legal tender but are promissory notes and accepted at the discretion of their recipient.
There are many differences between Irish and Bank of England banknotes.
The sterling of the Crown Dependencies and British Overseas Territories
First of all, do you know the difference between the Crown Dependencies and the British Overseas Territories? The Crown Dependencies (the Channel Islands and the Isle of Man) are under the sovereignty of the British Crown but aren’t part of the UK. They’re able to have separate laws which are decided by their legislative assemblies. However, British Overseas Territories (such as Bermuda) aren’t a part of the UK either but they’re under its jurisdiction. This means their inhabitants must follow British laws.
The currency of the Crown Dependencies
Before we look at the islands’ individually, let’s define the status of their currency. All of the Crown Dependencies use sterling; it isn’t considered to be a separate currency but is a local issue of our currency. It isn’t legal tender in the UK although both notes and coins circulate freely between these islands. Sterling can also be used in these places.
History of Guernsey’s currency
Coins from France were initially used on the island (both the ‘livre’ and later the franc) until they started minted their own in the 19th century. However, from 1827 the first banknotes tended to be issued in sterling. In the 1870s British coins and Bank of England notes became legal tender. In 1921 Guernsey entered into a currency union with the UK because the value of the French franc had fallen dramatically as a result of the 1st World War.
5 amazing facts about the currency of Guernsey
- £1 banknotes are still legal tender on Guernsey.
- The £2 Guernsey coin features the island’s flag: St. George’s cross with the Normandy cross inside.
- Guernsey produced a commemorative £1 in 2013 in honour of the printer Thomas de la Rue who was born in Guernsey. The company which bears his name prints the Bank of England banknotes and was celebrating 200 years of business.
- The 2p-coin features a picture of a Guernsey cow. Recognised as a breed in 1700, imports of cattle were forbidden after 1789 to preserve the purity of the breed.
- During the German Occupation in the 2nd World War, coins were scarce so the authorities there were forced to print banknotes for sums as small as 6d, 1s 3d, 2/6 and 5/-.
History of Jersey’s currency
Until the 19th century Jersey used the coins of France (the livre and later the franc) but in 1834 the pound sterling was adopted as sole official legal tender by Order of the Council. Despite this, French coppers continued to be used for a time for small transactions. The first Jersey bank was opened in 1797 and produced small denomination banknotes. Until the 1890s these were locally-printed and were used to fund local public works.
5 interesting facts about the currency of Jersey
- Current Jersey banknotes are written in 3 languages: French, English and Jerriais.
- On the 200th anniversary of the Battle of Jersey (1781) Jersey produced a commemorative £1 coin…which was square! The battle was an attempt at a French invasion to stop the island being used as a base for shipping to harass French/U.S. vessels during the American War of Independence.
- Jersey’s £100-note features the island’s Coat of Arms – similar to that of England, permission to use the 3 lions passant guardant was granted to Jersey by Edward I in 1279.
- The Latin inscription round the edge of coins is the island’s motto: ‘Caesarea Insula’ (meaning ‘Island of Jersey’).
- During the 2nd World War, German soldiers were keeping Jersey coins as souvenirs so the island was forced to replace them with banknotes. The ‘x’ of ‘sixpence’ was printed extra-large so when the note was folded, it became a ‘v’: the ‘V’ for ‘Victory’ – a symbol of resistance.
History of the Manx pound – Currency of the Isle of Man
The first coinage on the Isle of Man was minted privately in 1668 and known as ‘Murrey pennies’. 1709 was the first minting of official (government) coins. Because Manx coinage was being passed off as sterling currency for a profit, a 1839 Act forbade the minting of coins and until decimalisation (1971), the coins used were the same as the rest of the UK. Banknotes have been issued on the island since 1865. When the island’s right to issue notes was revoked in 1961, the island began to issue its own although the island’s Currency Act of 1992 has restricted the issue of unbacked currency.
The first coinage on the Isle of Man was minted privately in 1668 and known as ‘Murrey pennies’.
5 Things you didn’t know about the Manx currency
- The picture of the Queen used on Max currency doesn’t show her wearing a crown since she’s a Lord on the island rather than a sovereign.
- A 50-pence banknote was issued on the Isle of Man until 1989 while the £1 coin was introduced there in 1978 (5 years before the UK).
- The Isle of Man used a polymer banknote from 1983 to 1988.
- In 1839 when the British government outlawed Manx coinage there was widespread civil unrest. Known as the ‘Copper Row’ riots, they had to be put down by the militia.
- The first coins to show the 3-legged symbol of the island (the triskeles) were minted in 1668.
British Overseas Territories and sterling
There are 14 places which are classified as British Overseas Territories. However, some use the pound sterling as their currency (such as South Georgia and the South Sandwich Islands) whilst others use a different currency such as the dollar (like Bermuda).
The ones which use sterling have generally the same system as the UK; the only difference is that the designs on both the coins and notes will be of local flora, fauna, symbols and/or historical events. As far as their legal status is concerned, although UK sterling circulates there, their coinage and banknotes can’t be used in the UK.
The history of Gibraltarian currency
Until 1872, Gibraltar used a system of British, Spanish and Gibraltarian coins with a complicated exchange rate to convert them. However, when the value of the Spanish peseta fell during the Spanish-American War (1878), the pound was introduced as the sole currency. The island started issuing their own banknotes in 1927 and this right was affirmed by the Currency Notes Act of 1934 with the proviso that it was backed by reserves of sterling.
5 unusual facts about the Gibraltarian pound
- The Barbary macaque, shown on the 1p- and later 5p-coins, is the only wild population of monkeys found in Europe and is one of Gibraltar’s most popular tourist attractions.
- The commemorative £5 coins of 2010 gave the monarch’s title as ‘Queen of Gibraltar’.
- The £2 coin commemorates the Capture of Gibraltar during the War of the Spanish Succession (1704).
- During the 1st World War, in order not to pay out in sterling and gold, the Gibraltarian authorities issued low-denomination banknotes and in the beginning, each was signed by the Treasurer by hand.
- The Gibraltarian £5-note shows a picture of HMS Victory being towed into Gibraltar by HMS Neptune after the Battle of Trafalgar.
History of the Falklands Islands currency
The pound was reintroduced in 1833 when Britain reasserted sovereignty over the islands. Special banknotes for the island have been issued by their authorities since 1899, initially in small denominations. The £10-note wasn’t printed until 1975, the £20 banknote in 1984 and the £50 in 1990. Specially-minted coins of local design have been struck since 1974.
How much do you know about the currency on the Falklands Islands?
- The 50p-coin depicts a warrah (also known as a Falklands Islands wolf or fox); it’s their only native land mammal.
- During the Argentinian invasion, pesos also circulated on the islands.
- The £1 coin on all the banknotes show the islands’ Coat of Arms. Dating back to 1948, this is a shield containing a ram on grass with a sailing ship underneath with the islands’ motto: ‘Desire the Right’.
- The £2 coin was introduced in 2004 – 6 years after the UK.
- In 2010, the Falklands Islands placed an order with De La Rue (the printers of the Bank of England notes) for 200,000 £10 notes and 200,000 £20 banknotes. It’s estimated that this order should last for 15-20 years.
The history of the currency on Saint Helena
The East India Company were the first to issue copper ½ penny coins for local use only (1821). The island started issuing low-denomination banknotes in the 18th century – the highest being £2. Before the introduction of the rand, the island used to use the South African pound and then switched to sterling. Since 1984 designs of coins are minted especially for Saint Helena and these also circulate on Ascension Island. The Currency Commissioners are part of the government of Saint Helena and are responsible for the issue of notes and coins.
5 fun facts about the Saint Helena pound
- The 5-pence coin shows a picture of the giant tortoise, Jonathan, who’s supposed to have been born in 1832.
- The £2 coin has an edge inscription of ‘500th Anniversary’ (2002) or ‘Loyal & Faithful’ (2003).
- From 1979-1984, St. Helena issued a 50-pence banknote.
- The £2 coin features the Coat of Arms of St. Helena. This is a shield with a St. Helena plover, a coastal scene, a 3-masted sailing ship with the English flag and underneath the island’s motto: ‘Loyal & Unshakeable’. This shield is embraced by the namesake of the island, St. Helena of Constantinople (who reputedly discovered remnants of the True Cross).
- The coins of St. Helena show flora and fauna which is unique to the island.