PREVIEW: BANKNOTES 1-2 MARCH

Confidence in paper currency in India had eroded significantly by the middle of the Great War and many people cashed in their notes for coins. This created a crisis for the Indian Government which eventually ran out of silver and so could no longer convert the notes.

The situation inevitably caused a rise in the silver price, which in turn led to people hoarding their silver coins. The crisis was ultimately averted in 1918 thanks to intervention from the USA, which supplied 200 million troy ounces of silver for conversion into rupees.

Until the shortage, the lowest denomination note had been 5 rupees, but as the crisis continued, the Government of India attempted to offset its difficulties by issuing lower denomination notes, in 1 and 2½ rupees, from the beginning of 1918.

Initially, continuing lack of confidence meant that they were exchanged at a considerable discount, only gaining wide acceptance at face value in 1920.

A rare example of the first print, released through Cawnpore, is being offered in this sale.  A 2 Rupees 8 Annas, serial number A/1 158185, and with Gubbay signature, the uncirculated note is sealed in PMG holder 63, and is very rare.

This first Cawnpore issue was rendered all the rarer after the German navy torpedoed and sank SS Shirala, whose cargo included a stock of 1 rupee notes being shipped from England to India - another example of how the First World War had a significant impact on the history of paper currency.  

The note is part of a superb group being sold by legendary collector, Bruce Smart, whose name is synonymous with exceptional quality paper money. The estimate is £20,000-26,000, with Dr Smart donating the entire hammer price for this note, and the rest of his collection to charity.

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