New £20 Bank Note for Britain Published April 2, 2007 By Natalie Benge Community Relations Adviser ROYAL AIR FORCE LAKENHEATH, England -- The Bank of England issued a new-style £20 note, March 13. The note features Adam Smith on the back, one of the fathers of modern economics, and incorporates enhanced security features. It is the same size and predominantly the same colour as the old-style £20 note. The old note will be progressively withdrawn from circulation. The date its legal tender status ends will then be announced, at a later date. As with all Bank of England notes, they can always be exchanged for their face value at the Bank in London. History of Bank Notes In the 16th century the goldsmith-bankers began to accept deposits, make loans and transfer funds. They also gave receipts for the gold coins deposited with them. These receipts, known as running cash notes, were made out in the name of the depositor and promised to pay him on demand. Many also carried the words or bearer after the name of the depositor, which allowed them to circulate in a limited way. In 1694 the Bank of England was established in order to raise money for King William III's war against France. Almost immediately, the bank started to issue notes in return for deposits. This meant the note could be redeemed at the bank for gold or coinage by anyone presenting it for payment. If it was not redeemed in full, it was endorsed with the amount withdrawn. The notes were made out for the precise sum deposited in pounds, shillings and pence. During the 18th century, a gradual move toward fixed denomination notes. Beginning in 1725 the bank partly printed notes for completion in manuscript. The £ sign and the first digit were printed but other numerals were added by hand, as were the name of the payee, the cashier's signature, the date and the number. Notes could be for uneven amounts, but the majority were for round sums. By 1745 notes were partially printed in denominations ranging from £20 to £1,000. In 1759, gold shortages caused by the Seven Years War forced the bank to issue a £10 note for the first time. The first £5 notes followed in 1793 at the start of the war against Revolutionary France. This remained the lowest denomination until 1797, when a series of runs on the bank, caused by the uncertainty of the war, drained its bullion reserve to the point where it was forced to stop paying out gold for its notes. Instead, it issued £1 and £2 notes. The Restriction Period lasted until 1821 after which gold sovereigns took the place of the £1 and £2 notes. The first fully printed notes appeared in 1855 relieving the cashiers of the task of filling in the name of the payee and signing each note individually. In 1833 the Bank of England's notes were made legal tender for all sums above £5 in England and Wales, in the event of a crisis, the public would still be willing to accept the bank' s notes and its bullion reserves would be safeguarded. The 1844 Bank Charter Act was the key to the bank achieving its gradual monopoly of the note issue in England and Wales. Under the act no new banks of issue could be established and existing note issuing banks were barred from expanding their issue. Those, whose issues lapsed because they merged with a non-issuing bank, forfeited their right of issue. The last private bank notes in England and Wales were issued by the Somerset bank, Fox, Fowler and Company in 1921.