A very short history of Britain's iconic note.
Fools may know the ditty: "I went to a Chinese restaurant to buy a loaf of bread bread bread/They wrapped it up in a five-pound note and this is what they said said said/My name is Elvis Presley…"
Or something like that -- there are various versions.
The point is that the ditty and other songs mentioning five-pound notes tell us they're very much part of British folklore. And they have just survived a crisis.
After a decade of declining availability and deteriorating condition, the five-pound note is pretty much back where it should be, courtesy of a rescue mission mounted by the Bank of England, several banks and Sainsbury's (LSE: SBRY).
Britain's favourite note
In April, for the first time in a long time, there were enough fivers available in the nation's ATMs to meet demand. And this year, about £4bn worth of the notes will be stuffed into cash-dispensing machines compared with half that amount two years ago. So it seems like a good opportunity to look at the history of Britain's favourite note.
- Like all paper money, the fiver owes its origin to China where the folding stuff made its first appearance 14 centuries ago.
- The first five-pound notes, later known as "white fivers" because of the colour of the paper, certainly weren't intended for ordinary people. Issued by the Bank of England in 1793 to cover a shortage of gold coin during the Napoleonic wars, they were worth about £1,298 in today's money. Until then, the tenner was the smallest bank note.
- The last private fiver was printed by Fox, Fowler & Co, a family-owned bank in Somerset, in 1921 when it was merged with Lloyds (LSE: LLOY).
- In the early 1940s, Germany's Operation Bernhard attempted to flood Britain with fake fivers, but not very successfully. Most of the forgeries were spotted.
- After a 164-year run, the white fiver is finally replaced in 1957 by the helmeted Britannia in her first appearance.
- Next came fivers with faces, starting with the present Queen in 1963, the first monarch to have a portrait on the fiver. The Duke of Wellington had the honours on the first "pictorial" fiver in 1971.
- The "historical" series got off to a bad start in 1990 when somebody got wrong the year of the death of engineer George Stephenson, designer of the "Rocket", and a few million notes had to be pulped. The same misfortune befell the 2002 issue starring prison reformer Elizabeth Fry because it was found the serial number could be rubbed off. However, the good lady still features on the current note, albeit with better ink.
- By the turn of the millennium, fivers were in a sorry state. They accounted for just four per cent of total notes in circulation, compared with nearly 11 per cent a decade before, because ATMs were stocked with higher denominations.
- By 2009, with the ratio of fivers down to 2.7 per cent, something had to be done and the rescue mission was launched. As Bank of England governor Sir Mervyn King had observed earlier, "our bank notes must be trusted by the public". Yet we couldn't trust a fiver not to fall apart. The problem was they were staying in circulation too long, up to two years, and had become "soiled and scruffy", in the words of King. This was happening despite being made from a paper formed of a hard-wearing mixture of cotton fibre and linen rag instead of the usual wood pulp.
- Just before 2010, Sainsbury's started stacking more fivers in their tills in a pilot scheme with the Bank of England. HSBC (LSE: HSBA) did the same in street-facing ATMs, and at remote locations in supermarkets and petrol stations.
- This proved to be quite an exercise. The technology and software on these pilot ATMs had to be reconfigured. And the fivers had to be "sorted to a superior quality, ATM-fit standard", according to Victoria Cleland, the Bank of England's head of notes division. Otherwise, cash-dispensing machines would break down.
- A major discovery was made -- people went out of their way to find those ATMs identified as holding fivers. The note was making a comeback.
- In April, the rescue mission was declared a success after Barclays (LSE: BARC), Lloyds, RBS (LSE: RBS) and others got the percentage of fivers in circulation via their ATMs up to 1.5 per cent of the total notes out there.
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