The Parliament of England passed an Act in the year 1773 in which it was decreed that the death penalty would be levied on anyone found guilty of copying or imitating the watermarks used in the bank-notes of the British Isles. John Mathieson, a Scotsman, was the first man to be convicted of attempting to create counterfeit bank notes utilizing a watermarked paper that was so remarkably similar to that used for official bank notes, that a group of papermakers testified that the paper and its watermark had to be genuine. Mathieson, proud of his achievement, claimed that he had, by a secret procedure, 'added' the watermark to the paper after it had been produced. He asked for his freedom in exchange for knowledge of the secret procedure, but the court would not agree to the bargain, and so the secret died with Mathieson.
Another skillful individual who created counterfeit bank notes was Charles Price, commonly known as "Old Patch" for the eyepatch he used as a disguise. Price began his operation of counterfeiting bank notes in 1780 and got away with his crime for a number of years. His bank notes were accepted by the Bank of England because everything about them, including the watermark, was as precise and accurate as the real thing. Price was able to achieve his feat by making the paper himself.
In September of 1801 the Bank of England began a concerted attempt to crack down on counterfeiters when it issued an advertisement stating that "All the one and two pound notes issued by the Bank of England, on and after the first of August will, to prevent forgeries, be printed on a peculiar and purposely constructed paper; consequently those dated 31st July, or any subsequent day, will be impressed upon paper manufactured with wavy or curved lines."
Between 01 January 1812 and 10 April 1818, it is estimated that there were 131,331 pieces of forged bank paper circulated in England. In an effort to combat the problem, the government, between 1797 and 1817, made some eight hundred and seventy prosecutions, and executed over three hundred of the individuals. During the first three months of 1818 alone, there were one hundred and twenty-eight prosecutions and thirty-two men hanged for the crime of counterfeiting. Now it should be noted that not all of those who would have been arrested for counterfeiting were involved in creating watermarked paper for their counterfeit currency, but some undoubtedly were.
Working for the Bank of England, Sir William Congreve came up with a technique to produce what is known as a colored watermark. The technique consisted of overlaying a very thin couched sheet of white paper with a layer containing a design of colored pulp, and then overlaying that with another very thin white couched sheet. The three layers would then be pressed and dried. Like a true watermark, the colored watermark was only visible when the paper was held up to the light. Sir William submitted a proposal to the Commission of the Bank of England on 30 October 1818.
Over the course of the following year, Sir William experimented with different formats for the paper. According to Sir William: "These experiments were at first all carried on by making the triple Paper of three separate layers and three couchings. On the 12th of February I desired to have some with two layers only to be sent up that they might be printed on the interior layer and returned for another white layer, so that the printing would be in the heart of every sheet. On the 19th of February it occurred to me that a good effect might be produced by leaving part of the interior bare so as to produce a coloured border round the edge. This border helps to complete the genuineness of the triple Paper with the colour in the interior... (A)ll the specimens hitherto produced were either without a watermark, or with common wire watermark. I now conceived that a very superior watermark might be produced by a filigree pattern cut out in metal, and accordingly on this principle an oval watermark in silver was prepared... The great security of this description of watermark is that the lines of the pattern may cross in the most complicated scroll or cheque work which involves a difficulty in the imitation either by varnish or by cutting out the middle leaf... I caused another watermark also to be made which was used quite on a different principle to any hitherto adopted, it was not attached to the mould, but to the deckle and lifted off with it, so as to carry away with it all the pulp where the watermark is intended to appear." In regard to the security aspect of his invention, Sir William noted also that: "The most simple rule may be laid down for the test of the genuineness of the triple paper, namely that when held up to the light and looked through the colours will look much stronger than when looked at. Now, if the colour were not in the interior, which we have seen is a process too difficult for the ordinary forger to attempt in his paper, the very reverse would be the effect, that is, if the colour were stained on the surface which seems to be the only mode of imitation open to the forger, then the colour will look paler when looked through than when looked at, instead of looking stronger as in the genuine note. And to prove this difference to the Public on the note itself, a narrow border of the interior coloured pulp is left bare all round the note, in this border, therefore, the colour is superficial and accordingly when the note is held up to the light the border where the colour is superficial and which is the strongest tint when looked at, appears the palest when looked through."
The triple paper was patented by Sir William Congreve on 04 December 1819. Despite the cleverness of this technique, the use of the paper was not adopted by the Governor and Directors of the Bank of England primarily because Mr. John Portal, of the Portals firm which had, since 1725, produced all of the paper for the Bank of England, did not hold Sir William in the highest regard. He had attempted to imitate Sir William's triple paper, but had not succeeded, and so he harbored a bit of animosity toward the inventor. The samples of triple paper produced by his experiments in 1818-1819 were apparently the only paper of this kind produced by Sir William Congreve; after he obtained the patent, he pursued other interests until his death in 1828.
It should be noted that there were two subsequent attempts to produce colored watermarks based on Sir William's invention. In 1885 a Mr. Lee, of Wookey Hole in Somerset, England, began to experiment with the idea, but it came to naught. Then, in 1900, W. Fairweather and A. and G.B. Fornari obtained a patent for a triple layer paper based on the same principle as Sir William's. There is no record of any such paper having been produced by the three gentlemen.