£1 note, 1827

NatWest Group History 100 object 3: £1 note issued by the Royal Bank of Scotland, 1827.

Scotland has a much longer tradition of £1 notes than England. In former times, issuing £1 notes was one of the most important ways in which Scottish banks supported their customers, in an economy which was perennially short of coins. When the government tried to ban £1 notes in 1826, the people of Scotland rose up in their defence. This 1827 £1 note is from the Royal Bank of Scotland’s first new design to be issued after the Scots had saved their £1 notes.

In 18th century England, banknotes were only issued for larger sums of money, so ordinary people almost never saw or used them, but the situation north of the border was quite different. Scotland suffered persistent shortages of coins, which made it hard for people to do day-to-day business. When the first Scottish banks were formed, they quickly saw the difficulties their customers faced, and began issuing £1 notes for use in comparatively small transactions. People in Scotland soon came to depend on these new notes to buy and sell goods, and to pay or receive wages.

By the early 19th century many English banks had also taken to issuing smaller denomination notes, but in 1826 the government announced a plan to ban all notes with a face value under £5. It met with little opposition in England, where the banks had been blamed for over-issuing notes, causing economic instability. There, it was agreed that some kind of control was urgently needed.

Scotland, on the other hand, needed small value banknotes, and their circulation had never caused any problems. Furthermore, generations of Scots were used to using £1 notes, and would be directly affected by their loss. As one commentator wrote at the time, ‘the country was instantly in a blaze from one end to the other. I never saw Scotland unanimous before.’ Most famously, Sir Walter Scott – the greatest Scottish writer of his age – wrote passionately in their defence, under the pen-name Malachi Malagrowther.

The government had not expected such uproar, and formed two committees of enquiry to look into the matter. The committees concluded that Scotland’s banknote system was working perfectly well, and it would be better not to interfere. The battle was won, and Scotland kept its £1 notes. 

Most Scottish banks continued to issue £1 notes for more than a century after the 1826 furore. As the decades went by, the value of each note decreased with inflation; a £1 note, worth about £120 of today’s money when the Royal Bank of Scotland was founded in 1727, was worth something more like £75 in 1827 and £45 in 1927. By 1980, there were three remaining note-issuing banks in Scotland. Like the Bank of England, two of the three stopped issuing £1 notes in the 1980s, leaving the Royal Bank of Scotland as the sole issuer of £1 notes in Britain today.