Collectors turning old cash into a thing of note

If you can bring yourself not to cash them in, banknotes can be a good investment, says Edmund Tirbutt
Click to follow

Anyone who stumbles across an old British banknote at least has the comfort of knowing that the Bank Of England is obliged to exchange it for the cash equivalent of its redeemable value.

Anyone who stumbles across an old British banknote at least has the comfort of knowing that the Bank Of England is obliged to exchange it for the cash equivalent of its redeemable value.

Nevertheless, although this facility may be worth taking advantage of in the case of a moth-eaten fiver from the 1970s, the presence of a formidable collectors' market ensures that it would be the wrong option in the vast majority of cases.

This market also has a significant international dimension, with the US inevitably being at the fore when it comes to headline prices. The most celebrated of these is the $792,000 paid at auction in 1998 for a US Series 1863 $1,000 Treasury note, nicknamed the Grand Watermelon as a result of its distinctive colouring and the shape of the figures on the back.

Even the Far East figures prominently, with China having played host to the earliest ever banknotes as far back as the 14th century. As far as sales made in this country are concerned, however, the bulk of demand is for domestic material. Indeed Bonhams reports that around 70 per cent of notes sold at its auctions are British.

Experts stress that virtually all items are bought by collectors as opposed to investors, but this does not mean that they have not proved good investments.

Christopher Webb, director of auctioneers Dix Noonan Webb, says: "There has definitely been an upward spiral in banknote prices during the last two or three years, when they have probably been rising by around 10 per cent a year on average, and British and Irish notes have been especially in demand. To some extent this reflects the increased interest in collectables generally that has been driven by disappointing stock market performance."

The most valuable British items tend to date back to before 1914, although even £100 notes from the 1930s can be worth £1,000 to £1,500. It is rare to find post-1930 British notes worth more than £100 but there are always the odd exceptions.

Pam West, a dealer in British notes based in Sutton in Surrey, bought a £1 note from 1967 for £11.50 in 1980 but currently values it at around £400. The attraction is the fact that it has a "T02M" prefix, of which only one million were issued.

She says: "I have never seen demand for any British period collapse during my 30 years in the business, possibly because banknotes as a whole are a very small niche area. We have seen certain types of English note improve dramatically over the last two years, such as Treasury notes from 1914 to 1927 and white notes from all time periods, but in my opinion the British market generally is still truly undervalued.

"Scottish notes from all periods may be reaching their peak but I expect demand for Irish notes to come on strongly this year. Money can be made but it's important to do a bit of homework so that you know what you are buying."

The banknote field is unusual in having a collector base that is at least 99 per cent male. Most experts report interest from men from a cross-section of ages and backgrounds, but Dix Noonan Webb says its main collecting base is 50 to 70-year-olds. It believes these are men who collected when they were younger and put their hobby on hold until their children had grown up and they had paid off the mortgage. It is ironic that two of the leading dealers in banknotes happen to be women. Claire Lobel, head of the banknote department at west London-based dealers Coincraft also sells British notes but, unlike Pam West, extends to international ones as well.

She says: "British Commonwealth notes with portraits of monarchs from George V to Elizabeth II have a worldwide appeal because they have attractions to overseas collectors as well, but this area can present something of a mixed bag.

"A St Helena 50 pence note from the 1970s could sell for only a couple of pounds, whereas East African George V notes could be worth several hundred pounds in value, espec- ially if they have a high denomination and are in good condition. Australia has always had a huge collector base, but other countries like India, which never collected before, are now starting to do so. A lot of indian notes with portraits can prove very popular."

When it comes to those areas likely to throw up notes of least value, however, the Weimar Republic set up in Germany in the aftermath of the First World War tends to figure prominently. Anyone who discovers they have a billion mark note from the period could be forgiven for jumping for joy initially; but unfortunately if they take it in for valuation they are likely to learn that it is currently worth only between £5 and £10.

Inflation at the time was so severe that people had to go shopping with baskets full of notes to buy a loaf of bread. The inflation finally came to an end with the issue of the German rentenmark in November 1923. One rentenmark was denominated at 1,000bn marks, and one American dollar was worth 4.2 rentenmarks.

The banknote with the highest denomination was 100,000bn marks or 100 rentenmarks. It was issued in February 1924 and is relatively rare. A one hundred billion mark note could be worth several thousand pounds, if it is still in good condition.

Generally speaking, condition is the single most important determinant of value across the entire range of countries and time periods - although low serial numbers can also be important factors. There can also be dramatic differences in the market values of various signature combinations or dates on otherwise similar designs.

Care should be taken to avoid items that have been ironed, folded or cleaned, and once a note has been torn experts will always notice if it has been restored, so the process of restoration will not necessarily add any value. Collectors are advised to keep their notes flat, ideally in a good album with an acid-free base.

But there is one area in particular where damaged goods are very much sought after. In Britain during the first half of the 19th century it was common for those posting money to tear notes in half and send each half separately in order to protect against theft and robbery. A £10 note from 1840 which has had its two halves taped together again could be worth over £4,000.

Of the London auction houses neither Christie's nor Sotheby's holds sales relevant to old banknotes, but Bonhams, Dix Noonan Webb, and Morton and Eden hold numismatic sales which combine banknotes with vintage coins and medals.

Spink is unusual in devoting entire sales specifically to old banknotes, and will be including a large group of English provincial bank notes in its world banknote auction on 27 April. The sale will also include a charity lot of Scottish notes, largely from the 1920s to the 1970s, consigned by the Royal Bank of Scotland. All the profits from the sale of these will be devoted to the Scottish Society for Autism.

Barnaby Faull, director of Spink's banknotes department, stresses that, whether you are buying at auction or from a dealer, the secret is to go for quality rather than quantity. He says: "The temptation when you are young is to buy 10 different things, but when you come to sell it's much easier to arouse interest in one quality note that's different than in 10 ordinary ones. So it is important to buy the best you can afford and, as with most collectables, it is also important to buy something you yourself like because then there is a good chance that someone else will like it."


The first ever banknotes, which were made from the bark of a mulberry tree, were issued in China by the Ming dynasty in the 14th century. These are about the size of a tabloid newspaper and currently sell for about £500 each.

In Europe, however, the earliest ever notes date back only to 1666 and were issued in Sweden. By the end of the 17th century notes were being produced in Norway as well like the one pictured right.

In 1694 the Bank of England was established and almost immediately started to issue notes in return for deposits. Our market is unusual in that all notes issued by the Bank of England are guaranteed to be worth their redeemable value. (Only notes issued in the US from the mid 19th century onwards carry such guarantees. ) During the 18th century there was a gradual move toward fixed denomination notes which by 1745 were being part printed in denominations ranging from £20 to £1,000. In the latter half of the century gold shortages caused by war and revolution led to the production of £10, £5, £2 and £1 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 one. The phrase "I promise to pay the bearer on demand the sum of ..." remains to this day.

The bulk of demand for British notes is for those issued prior to 1914, when we left the Gold Standard, because before then gold coins and notes were largely interchangeable. There were thus fewer notes in circulation pre-1914 and £50 and £100 notes are especially scarce.


British Provincial notes from 1800 to 1840, like the one above dating from 1808, have been enjoying something of a purple patch, and some that cost well under £100 only 10 years ago are now selling for over £1,000.

Whilst the Bank of England was already the central issuing authority during that era, it was not always easy to access for those living outside London. Groups of local merchants would therefore get together to form local banks and produce their own notes, but by the mid-19th century an economic slump had ensured that most of these enterprises had folded.

The first £1 Treasury notes introduced in 1914 represent a further hotspot, especially if signed by Lloyd George, who was Prime Minister at the time (see below).

Scandanavia and China, are also rarely from collectors' thoughts, having been respectively responsible for issuing the first ever banknotes worldwide and the first European bank notes. A Chinese Ming dynasty note, right, is a popular collector's item.

Additionally, Spink highlights the popularity of Palestinian notes from the 1930s and 1940s, one of which it sold for as much as £50,000 last April.

Dix Noonan Webb enthuses about demand for South African notes from the 1880s, which can be bought for between £50 and £100 each; and Bonhams reports that notes from the 1860s in the US Confederate states, which can fetch anything upwards of £100, are currently very much sought after.

Looking for credit card or current account deals? Search here