When I lived as a student in London 1991-92, one day I decided to visit the Bank of England to see what they would do if I presented a 5-pound note for redemption of the promise to pay the bearer “five pounds” on demand. The tale was told in a guest reflection in Liberty in 1994.
The guest reflection:
Funny money — There’s some funny language on the money in England. The five-pound note contains the statement, “Bank of England: I promise to pay the bearer on demand the sum of five pounds.” Five pounds of what? If you ask anybody on the street, the note is five pounds, and they obviously aren’t talking about units of weight—so what could that statement possibly mean? I decided to visit the Bank of England in downtown London to make them make good their promise. What would they do—hand me back another five-pound note in exchange for the one I offered?
I was stopped at the door by a security guard. I explained that my note said that the Bank would give me five pounds upon demand for it, and that I was hereby demanding they fulfill their obligation. He explained I couldn’t get past the front desk without wearing a three-piece suit and having “official business.” The man behind the front desk had little patience, telling me that perhaps I’d find some information if I went to the Bank of England Museum around the corner.
So I left and went to the museum, which is quite nice, actually. I explained to a curator what had happened, and that I was interested in finding out what exactly the language could mean. It obviously didn’t function as a promise to pay me five pounds—the bank wouldn’t even let me through the door! She disappeared into a back room and, finally, dug up an old photocopy from God-alone-knows-where, which attempts to explain the meaning and evolution of the “I promise to pay the bearer” language. I took the pages home and tried to understand them [note: these pages are included in the attached PDF file]. Apparently, the Bank is now contending that the language only means, and only ever meant, that it has an obligation to replace old, out-of-circulation pound notes with new, in-circulation ones.
Right. That’s what “I promise to pay the bearer on demand the sum of five pounds” means.
—guest reflection by N. Stephan Kinsella
[Mises]
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