Mr Chairman, ladies and gentlemen,
Forty years ago I visited England for the first time. Since then many things have changed. But one thing that has not changed or improved over these years is my Broken English, so perhaps you ought to prepare yourselves for this.
I hope you don’t see Broken English as an attempt to speak English. In my opinion it is a language in its own right spoken all over the world by waiters, ambassadors in Washington, postcard-sellers in Hawaii, businessmen in South America and by scientists at international conferences. It is a rich and flexible language, giving me all the liberty I need. Somebody told me that when you receive an invitation to a party it may turn out to be a boring party but when someone tells you, ‘tonight we will have party and we shall drink the whisky,’ then you know it will not be a dull evening at all.
Now about banknotes. For the oldest banknotes we have to go to China. We know that from Marco Polo, the Venetian discoverer, who lived at the end of the 13th century. He stayed in China for many years and reported about the printed banknotes there at a time when printing had not yet been discovered in Europe. We can’t compare these first Chinese banknotes with our modern notes. When a banknote changed hands in China the new owner’s name and the date were put on to the note. The reason that a piece of paper was accepted in China as money was simple: when the Emperor of China said that the paper had such a value it had that value. Not accepting it was regarded as high treason resulting in capital punishment. This power in China ended when the Emperor lost his magical influence. And so it happened that in the 15th century the Chinese banknotes ceased to exist, only to be reintroduced at the late date of 1851.
How banknotes started in Europe in the 17th century is explained perhaps as follows. At that time goldsmiths kept only a small amount of gold in their workshops and gave their main stock into custody for which they received a receipt. They discovered that they could trade with these receipts and so dispose of the gold, in fact just like using banknotes. Sweden was the first country in Europe to issue banknotes as legal tender in 1661 but they printed too many and had to withdraw them within a few years. Second was the Bank of England, established in 1694, by Charter of your Dutch king William the third. The only grudge being voiced against it was by those who felt that England had too many Dutch things already! The Bank of Scotland came next in 1695 with other Scottish banks following. Holland in fact was very late with banknotes, not until after the French occupation in 1814. Why De Nederlandsche Bank commissioned Enschede to print the Dutch banknotes finds its origin in our typefoundry. When our printing firm, established in 1703, bought a typefoundry, forty years later it was in fact a separate enterprise. Apart from new typefaces Enschedé commissioned their puchcutter Joan Michaêl Fleischman to make punches and matrices of small dots and lines with which music could be composed. It turned out to be an enormous task, comprising 226 punches and 240 matrices. The music type was used for a Dutch translation of Leopold Mozart’s book on learning to play the violin. When Leopold Mozart came to Holland in 1765 he visited Haarlem with his famous nine year old son Wolfgang Amadeus and daughter Maria Anna (‘Nannerl’). While his son was playing the organ in the church opposite our works, Leopold Mozart admired the Dutch version of his book. He mentioned in a letter to Salzburg that he preferred the Dutch edition to the German one! Copyright was in those days apparently not an issue at all. This way of setting music with all these small these small pieces of type was too costly and therefore failed; and no one bought the music-type. After several years it was discovered that all these small lines, dots, etc. could be used in making intricate borders which would be impossible to copy as these types were not on the market. That ability of making complicated figures resulted in De Nederlandsche Bank ordering their banknotes from us from the start. In this way our worst failure in the typefoundry lead to our success in printing banknotes and securities!
In most countries including England and Holland the first banknotes were not completely printed. They were actually printed forms on which the value, the numbering, the date and the signatures were laboriously put in by hand at the central bank. Even now when we deliver completely printed and packed banknotes to the Bank, they are officially considered to be forms, and become banknotes only when they are issued by the Bank.
I would like to stress that a banknote is a compromise in several respects. To get the best printed result you want soft paper; to survive in circulation you need strong paper. Of course one strives to obtain an artistic design but the security experts are very clever in spoiling that design by giving priority to security.
Safeguarding against forgery is a never-ending battle, in which both opponents make progress all the time. The protection of banknotes is not based on a single anti-forgery device but on several features as a mosaic of defence. First comes the protection which the paper can give: a watermark, especially a light-and-shade one. More than 90% of forgeries are on paper without a watermark, a security thread in the paper, of metal or plastic, straight or broken or with magnetic information. And further coloured fibres, planchettes and fluorescence. These features give quite a good protection. But luckily we still need a printer as without him a banknote would be a blank note.
The first banknotes had a typographical character and were printed from engraved copperplates or in letterpress. Right from the beginning there were forgeries and the harshness of the punishment – even the death-sentence or transportation (also for just handling forged notes) – shows how risky it was.
When photography came into use it took quite a while before printers had an adequate answer to this. It consisted of the use of more colouring, and more printing techniques, microtext too small to be photographed with success, and a perfect register not only between the colours on one side, but also between front and back when held up to the light. Nowadays the advanced graphic scanners and colour-copiers give us the same sort of challenge as photography did so many years ago. Up till now there are two ways of dealing with that new problem. You can use shiny images like holograms and kinegrams to be found on most credit-cards. They themselves are colourless but reflect the light in different colours depending on the angle of the light. A colour-copier cannot deal with them and they are incorporated in some banknotes such as the 5000 Austrian Schilling note and in Australian notes as well. A disadvantage is that in a banknote this is a foreign element introduced into the paper or stuck on it and it attracts so much attention that the holder is too easily satisfied when the image is there.
Another approach is to study the colour copier machines and to find out a method of misleading the copier. The principle way to do this is to concentrate on the difference between the working of the human eye and that of the copier. The copier works along horizontal and vertical lines very close to each other and by doing so the line above or below does not affect its work. The human eye, however, always takes a larger area into account and obtains a more general impression. To take advantage of this difference is the work of mathematicians who can put that into a computer programme. Then you can make two different images, one upon the other in such a way that one picture is seen by the human eye and the other by the colour-copier. The consequence of this development is, that chemists and physicists at work in the security laboratory, are now joined by mathematicians.
All these anti-forgery devices take it for granted that people look at banknotes, but that is not always the case. It is therefore necessary to increase the perception of the general public. Investigations have shown that in this respect banknotes should be conspicuous rather than beautiful.
Much can be said about forgeries and the forgers. More than half of all the counterfeits in the world concern American dollars.
Sometimes just one man with great skill and invention can make a remarkably good counterfeit. On our Dutch banknotes there is a penalty clause in very small characters reading something like this: ‘he who makes a counterfeit of this banknote is liable to be sentenced to etc.’ It seems psychologically difficult for a forger to work for many hours on such a text and in some cases the forger has been known to change it to: ‘he who makes a counterfeit of this banknote is liable to work long hours with the risk of being caught.’ The most well known political counterfeits were the British banknotes printed in Germany during the last war but there have been several others.
A very intriguing forgery by a small group of persons was the so called Portuguese banknote case with which I will end. In 1924 a Dutchman with a respected name came to our office in Haarlem to discuss the reprint of a 500 Escudo banknote for Portugal. He had a nice set of authorized documents from the Banco de Portugal with him which looked impressive but were false. My cousin noticed that the banknote had been printed by Waterlow in London and he thought it would be better if Waterlow did the printing. The esteemed Dutchman invited my cousin to join him on his visit to London but my cousin had a party that he didn't want to miss. Instead he wrote a letter of introduction to Sir William Waterlow. To cut a long story short Waterlow printed the banknotes as they were convinced that it was a very secret commission in which only the governor and one director of the Bank were involved. The brother of the Portuguese ambassador in The Hague was in the plot; he was a great help by making use of the diplomatic mail. With these banknotes the conspirators had a great success in Lisbon. They set up a bank called Bank Angola and Metropole because that was the best way to get rid of the banknotes and to invest the proceeds. They invested in Angola and bought shares in the Banco de Portugal in the hope of getting enough control over the Bank so as to cover up the whole plot. The people involved enjoyed much respect in society, one of them was officially honoured. The success was overwhelming and a second reprint was ordered. At a certain moment the inevitable happened: banknotes were discovered with the same numbering while the Banco de Portugal claimed they were genuine banknotes. Great consternation arose and even the governor and one of the directors of the Banco de Portugal were arrested. It took quite some time before the whole affair was sorted out. Eight people went to jail and the court case against the printer lasted 6 years until 1932. The extra money put in circulation had a value of between 5 and 6 million dollars. The printer claimed he had acted in good faith, the Bank had not paid for the banknotes and the Portuguese economy had flourished because of that extra money. At the end of it all the printer was sentenced to pay a vast amount to the Bank. Not because he had failed to notice that the authorized documents were false but because he had not checked the numbering of all the printed banknotes sufficiently which, as the judges claimed, is an essential requirement of a banknote printer. When, many years later, we printed Portuguese banknotes in Haarlem, we were never allowed to do the numbering which was done separately by the Bank in Lisbon. Anyway this, story shows one of the risks in the field of banknote printing, a trade in which I worked with much pleasure for many years.