Coins and banknotes have been counterfeited or forged for many centuries, probably since money was first used as a medium of exchange. Originally, coins were made of a quantity of metal equivalent in value to the face value of the coin itself. Thus, during the Saxon period in England the penny coin was made from one penny's worth of silver. Naturally some dishonest recipients of coins would shave a small amount of metal from the edge of coins they received, collect these shavings and melt them down to form lumps of metal which they could then sell. This problem was addressed by adding a pattern to the edge of coins, frequently of close vertical lines known as reeding, which clearly showed if part of the coin had been cut away, and thus the coin no longer contained the requisite amount of metal.
During the 18th century English pennies were made from copper. Between 1770 and the end of the 18th century forgers were melting down the real pennies and using the copper to produce multiple light weight fakes. Indeed the problem became so serious that practically no genuine pennies from 1770 to 1775 remained, only counterfeits. In response to the problem a man named Matthew Boulton proposed three suggestions to help combat the fraud:
1) That each minted coin should contain the same amount of metal as its value, eg one penny of copper should be used to produce a penny coin.
2) Minted penny coins should have a raised ‘retaining collar' so as to keep a constant diameter to the coins.
3) That minted pennies should have a broad, raised rim which would preserve the coins from excessive wear in circulation.
In addition to his three proposals to combat fraud, Matthew Boulton also suggested a mechanised, steam-powered coin press be used to manufacture the pennies in a more uniform design and more quickly than the current methods of production.
In 1797 the British government contracted Matthew Boulton's company, the Soho mint, to produce 20 tons of two pence coins and 480 tons of pennies, each penny weighing one ounce avoirdupois and containing one penny worth of copper. These new coins became legal tender on the 26th of July 1797 and quickly became known as cartwheel pennies and two pennies on account of their large and heavy size.
During the late 19th century an unusual situation occurred with the British one pound coin. These coins were made from gold and popularly known as sovereigns. However, by the end of the 19th century the value of the British pound sterling was greater abroad than the value of the gold in a sovereign and counterfeit gold sovereigns, containing the full weight of gold, were made in large quantities, particularly in Italy and Syria. These coins, like most counterfeits, were often poorly made, the relief or design being poorly formed, the edge reeding not matching, date inscriptions of uneven sizes, and frequently the design being dull or not so sharp where the coins have been cast rather than struck on a die. Many of the counterfeit gold sovereigns from the reigns of Queen Victoria and King George V during the late 19th and early 20th centuries carry dates which were never used on genuine coins.
During the middle of the 20th century a famous plot was uncovered in which Nazi Germany allegedly intended to undermine the British economy by flooding the market with counterfeit five pound notes. The Bank of England responded to the threat by withdrawing the existing white five pound notes and replacing them with a new, more difficult to reproduce design.
During the later part of the 20th century counterfeit British fifty pence coins, and later one pound were produced from lead. These are quite easily spotted by the softness of the metal. As time progressed more sophisticated counterfeiting of British pound coins evolved. To combat the problem the Royal Mint produced different designs of pound coin each year, but none the less the number of counterfeit one pound coins in circulation remained very high. Originally these counterfeit pound coins were designed for fooling vending machines. They were frequently blank metal discs of simply the correct size and weight. Later, as detection technology improved so also did the counterfeiting with designs engraved on coins. These sophisticated counterfeits can sometimes be detected by a misalignment between the designs on each side of the coin, or by poor quality or indistinct edge engraving. Some fakes have been cast, and these reveal a blurred design when compared with a genuine, die struck example.