On 27 February 1797, the Bank of England suspended specie payments to preserve its dwindling bullion reserve. Less than three months later, William Pitt’s government shepherded legislation through Parliament codifying the suspension of specie payments. In place of specie, Bank of England notes became the circulating medium of currency. The smaller denomination notes, however, were very poorly produced and were copied with little difficulty and on an unprecedented scale. The governing statute for banknote forgery, which was a capital offense, did not distinguish between the production, distribution and/or handling of counterfeit notes, and hundreds of individuals were either executed or transported for unknowingly accepting and using forged banknotes. For many, the forcing of an easily imitated and alien paper currency on the population, coupled with the severe punishment designed to police this new circulating medium, was a flagrant manipulation of legislative power that prioritized commercial interests over human life.
During the eighteenth century, the Bank of England monopolized the issuing of banknotes and bills of exchange. The Bank’s bullion reserve supported the value of its notes and bills, which were convertible upon request to specie (gold and silver coins). In 1795, the Bank began experiencing a significant drain on its bullion reserve due to the government’s need for gold to finance the war with France and also to pay for imported grain after a succession of bad harvests. (On England’s wars with France, see Mary Favret, “The Napoleonic Wars.”) Concerned for its ability to maintain the convertible value of its banknotes, the Bank embarked on a policy of contraction. While initially successful, this reduction in the number of circulating banknotes was undermined in 1796 by runs on banks in Newcastle, Sunderland, and Durham. These runs prompted other provincial banks to suspend specie payments and to request monetary support from the Bank of England. As news of the runs on northern banks filtered into London, panic gripped the financial community and demand for Bank of England notes increased exponentially, as they were still convertible to specie. By 27 February 1797, the Bank’s bullion reserve had dwindled to less than £1,000,000, forcing the Bank to suspend specie payments altogether. As a consequence of rendering its notes unconvertible, the Bank shook public confidence in itself and undermined the circulating paper currency. Indeed, without a convertible currency, the British financial system was in imminent danger of collapse.
To prevent economic failure and ensure continued funding for the war, William Pitt stepped in, creating a clever fiction to support the convertible value of Bank of England notes still in circulation. Pitt maintained public confidence in the circulating paper currency by asserting that the Bank was affluent and that the suspension of specie payments was a temporary measure initiated by the government for the benefit of the country. Pitt’s fiction worked; the day after the Bank suspended specie payments, London’s most prominent merchants and bankers issued a statement supporting the use of Bank of England notes for all financial transactions. A few days later, Parliament authorized the Bank to issue notes in denominations of less than £5 to ease the acute shortage of specie, which the public had been hoarding since runs on provincial banks the previous year. On 3 May, the Bank Restriction Act was passed, codifying the suspension of specie payments for a limited period and authorizing the use of Bank of England notes as de facto currency (37 Geo III c. 45). The strict time frame of the act bolstered public confidence in Bank of England notes by indicating that they would be redeemable for specie payments at a designated point in the foreseeable future. However, despite the Bank of England’s bullion reserve increasing as gold flowed into its coffers, thus enabling specie payments to be made, successive parliaments renewed the Bank Restriction Act annually until 1821. During these twenty-four years, known as the Bank Restriction Period, the Bank of England operated as a wing of the British government, helping to finance the Napoleonic Wars through its bullion reserve and by regulating the issue of credit.
While bankers and merchants embraced Bank of England notes as the circulating medium of currency, many were not taken in by Pitt’s fiction. On 24 March 1797, Richard Brinsley Sheridan criticized Pitt’s influence on the Bank of England in his famous description of the Bank as “an elderly lady in the City, of great credit and long standing who had. . . unfortunately fallen into bad company” (Sheridan 3: 164). James Gillray’s caricature, Political Ravishment; or the Old Lady of Threadneedle Street in Danger (1797) plays on Sheridan’s description by depicting Pitt seducing the Bank of England, personified as an old lady attired in £1 and £2 notes, for her fortune. (See Fig. 1.) Pamphleteers were also quick to attack the government, and Pitt in particular, for preventing the Bank of England from discharging its duty of converting its own notes (Long 7). There were also fears that an unconvertible paper medium would rapidly depreciate if the market were flooded with counterfeit notes (New Circulating Medium 2 and Analytical Review 298). Indeed, by issuing banknotes in smaller denominations, the Bank unwittingly encouraged forgery on a hitherto unprecedented scale. The Bank’s new, smaller denomination notes were hastily and very poorly produced, which made them easy to imitate. Furthermore, these banknotes were designed to replace specie used by a section of the public—the labouring class—unfamiliar with a paper medium; even if literate, many discovered that determining the authenticity of smaller denomination banknotes was extremely difficult, if not impossible. Even experts had difficulty distinguishing authentic banknotes from forgeries. In the trial of a French forger at the Old Bailey, the Bank of England’s engraver, Garnett Terry, was so surprised by the accuracy of the counterfeit £2 notes that he “could not have sworn to the forgery, had it not been for a single mark [on the authentic banknotes], which changed every month” (General Evening Post 4). The statute codifying the offense of “uttering false bank notes” did not distinguish between producing forged banknotes, distributing, and/or handling them. Thus, the punishment for handling a forged £1 banknote, whether knowingly or not, was the same as producing it: execution or, in mitigating circumstances, transportation. While the burden of proof lay with the prosecution, in cases of “uttering false bank notes” the defendant had to prove his/her innocence to the jury. This was because, once accepted, the banknote was considered “endorsed” as genuine by the recipient even if it was a forgery (Addington 95-6). Many considered the forcing of an easily imitated and alien paper currency on the population, coupled with the severe punishment designed to police this new circulating medium, a flagrant manipulation of legislative power that prioritized commercial interests over human life.
In the months before the Bank Restriction Act became law, proposals were submitted to the Bank of England for producing counterfeit-proof banknotes so that the human cost of transitioning from specie to an unconvertible paper currency would be eliminated. Using experimental engraving and printing technologies, Alexander Tilloch, owner and publisher of the Star newspaper and the Philosophical Magazine, approached the Bank with a method of stereotype printing that would, he claimed, render banknote forgery impossible. Despite recruiting the most prominent engravers in London, including William Blake, to his cause, Tilloch’s proposal was rejected. (On William Blake, see Joseph Viscomi, “Blake’s Invention of Illuminated Printing, 1788.″) Indeed, for the duration of the Bank Restriction Period, the Bank of England consistently failed to address the problem of banknote forgery. In the three years following the Bank Restriction Act, convictions for banknote forgery increased significantly, spiking with the discovery of large caches of counterfeit notes in 1800.
During 1817 and 1818, there were further spikes in prosecutions for “uttering false bank notes.” According to a report published by the Bank of England in mid-1818, the previous year had witnessed a twenty-year high for the number of prosecutions for banknote forgery. Of the 142 prosecutions in 1817, 95 persons were convicted and 32 executed. The Bank of England report also provides data for prosecutions from 1 January to 25 February 1818, revealing that in less than two months there had been 26 prosecutions, of which 21 persons were convicted and 4 executed (Kaye 155-6).Even before this report was published, concern about the rise in convictions and subsequent executions for banknote forgery had been addressed in the popular print media. In the February 1818 edition of The Examiner, for example, Leigh Hunt condemned the Bank for failing to counter the “late great increase in the number of forged bills,” noting that “transportation and hanging without mercy” were insufficient deterrents against the production and dissemination of counterfeit banknotes (The Examiner 92). The following year, the Society of Arts observed that “the rapid increase, during the last three or four years, of convictions before the criminal courts for the circulation of Forgeries of the Bank of England Notes, is such as to have made a very serious impression on the public mind” (Report of the Committee for the Society for the Encouragement of the Arts 1). The same year, George Cruikshank’s Bank Restriction Note appeared on the streets of London. Signed “J. Ketch” after the notorious seventeenth-century executioner, Cruikshank’s satirical print depicts eleven men and women swinging from a gibbet labelled “bank post.” The Bank’s seeming disinterest in remedying its easily imitated notes prompted its directors to be charged by contemporaries “with indifference to the cries of humanity at the heart-rending catalogue of persons tried and executed for the crime of forgery” (Williams 12). It wasn’t this popular outcry against the Bank’s apparent inhumane stance, however, that precipitated the end of the Restriction Period and the concomitant decrease in convictions for banknote forgery. Rather, inflation and a ballooning national debt in the wake of the Napoleonic Wars forced the government to yoke Bank of England notes once more to the gold standard. After a period of adjustment to offset deflation and allow exchange rates to realign with the gold standard, the Bank resumed specie payments in full on 1 May 1821.
HOW TO CITE THIS BRANCH ENTRY (MLA format)
published January 2013
Crosby, Mark. “The Bank Restriction Act (1797) and Banknote Forgery.” BRANCH: Britain, Representation and Nineteenth-Century History. Ed. Dino Franco Felluga. Extension of Romanticism and Victorianism on the Net. Web. [Here, add your last date of access to BRANCH].
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Kaye, Joseph. “Accounts relating to Prosecutions for Forging Bank of England notes.” New Annual Register 39 (1818), 155-6. Print.
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