Banknotes evolved from promises of silver into plastic and holograms
A banknote began as a bank's written promise to hand over gold or silver coin on demand. The Bank of Scotland started issuing its own in 1696 and has never stopped, the longest unbroken run anywhere. Most modern notes promise no metal at all and hold value by government decree alone.
Strictly, only paper money issued by banks counts as a banknote; notes from governments are something else, though collectors blur the line. Commercial banks once printed most of them. American banks issued their own notes until government authorisation took over between 1863 and 1932, and in Britain a few banks in Scotland and Northern Ireland still print notes, while Hong Kong licenses three commercial issuers.
Forgers arrived as soon as paper money did. In eighteenth-century England, notes were single-sided and printed from hand-engraved copper plates, and even the threat of execution failed to deter counterfeiters. Special paper helped, and in 1697 a Berkshire papermaker named Rice Watkins introduced watermarks. Demand soared during the Bank Restriction Period of 1797 to 1821, and in 1801 the mould maker William Brewer made watermark lines wavy; forgeries fell from 5,000 to 3,000 between 1802 and 1803. Banks hired engravers in what historians call the search for the inimitable banknote, and notes became double-sided and more intricate.
Materials changed next. Traditional note paper is cotton, sometimes blended with linen or other fibres, strengthened with polyvinyl alcohol or gelatin, and lasting about two years in circulation. Security threads that surface through windows in the paper, a De La Rue invention, joined watermarks. Austria's 5,000 schilling note of 1988, bearing Mozart, was the first paper note carrying a foil hologram.
Plastic had a false start: early Tyvek notes from Costa Rica and Haiti in 1983 shed their ink. Australia's scientists succeeded with a polypropylene note in 1988, and by 1996 every Australian denomination was polymer. Printing money without backing has repeatedly ended in runaway inflation, as when Austro-Hungarian paper kronen collapsed after 1914.
Source: Banknote
