The pound is 1200 years old, born about 775AD, when "sterlings" or silver coins were the main currency in Anglo-Saxon kingdoms. If you had 240 of them, you had one pound in weight - a vast fortune in the 8th century. A century and a half later Athelstan, the first King of England, founded a series of mints and made sterling a national currency in 928. In 1124, a disgusted Henry I had 94 mint workers castrated for producing bad coins. Sterling retained importance through the middle ages. Before the foundation of the Bank of England, the Tower of London was the store for spare money. Silver penny were the only coins right through until the 13th century and silver was the currency standard till the 18th century, when gold became the basis of the pound. The Bank of England and paper money
In 1694 King William III established the Bank of England to fund his fight with France. Goldsmiths had issued bank notes - promises to pay set against gold deposits - from the 16th century, but although the Bank of England was the first central bank in history, it has not always had exclusive control over the pound. But crime arrived quick on the banknote's tail.
By 1695 the first fraud happened. The authorities fined one Daniel Perrismore for forging 60 £100 notes - a lot of money in the late 17th century. Than the bank introduced a watermark to stop fraud, and the crown introduced the death penalty for counterfeiting. The Bank provided stability, but the pound still suffered from market ups and downs. The first £10 note was printed in 1759, when the Seven Years War caused severe gold shortages. Inflation fears of war with France led to the first £5 note in 1793. Sterling banknotes were originally handwritten, although the notes were part printed from 1725. The Bank began to print the notes in 1855, no doubt to the relief of their workers. The Gold Standard and Sterling's Supremacy
The principle of the standard, that a nation must back its banknotes...