British overseas trade boomed during the 18th century. ‘There was never from the earliest ages a time in which trade so much engaged the attention of mankind’, declared Samuel Johnson in 1756. This was especially true of trade with Britain’s rapidly expanding colonial possessions in the Americas and Asia. Surging intercontinental commerce offered a host of opportunities, not all of them legal. Smugglers took advantage of the British government’s imposition of heavy taxes on imports of exotic groceries, in particular tea, grown in China and imported by Europe’s East India trading companies. So onerous were the customs duties and so successful the smugglers that there were periods during the 18th century when more tea was smuggled than was imported legally.

Yet smuggling was far from the only illegal business to take advantage of the situation. Another was Yorkshire’s ‘yellow trade’, the local name for the business of clipping and counterfeiting the gold coinage that emerged in the Pennine Hills around Halifax in West Yorkshire during the 1760s. Like smuggling tea, the yellow trade was a runaway success. Gold guineas, each with a face value of 21 shillings (£1.05), accounted for the majority of the national currency by value in the 18th century. Clipping or counterfeiting guineas was high treason, subject to the death penalty. Nevertheless, in the course of little more than a decade, from 1765 to 1776, the activities of the Yorkshire coiners forced the British government to withdraw the whole of the nation’s gold currency from circulation, worth the huge sum of £16.5 million at 18th-century values, in order for it to be re-minted.

As with smuggling, the opportunity exploited by the yellow traders arose from government policy. In the 18th century gold coins effectively replaced silver as the British standard. This gold coinage was battered, worn and underweight, its gold content substantially reduced; gold guineas already 100 years old remained current. Yet fear of the expense of a general recoinage deterred governments from acting.

Counterfeiting has been practised as long as governments have minted coins. Yet the kind of counterfeiting undertaken in the Yorkshire yellow trade was distinctive. Most counterfeit coins that circulated in 18th-century Britain were made from base metals. They were intrinsically almost worthless and were not knowingly accepted by the public. By contrast, the yellow traders manufactured counterfeits from gold. Their counterfeits had an intrinsic bullion value not far short of legitimate gold coins in circulation in the 1760s. This was possible because, in Yorkshire, clipping and coining were combined: gold clippings were remanufactured directly into counterfeit coins.

Clipping was the process of cutting thin slivers of gold from the edge of a gold coin, which was then returned to circulation with its edges restored with a file. Britain’s gold coinage was so worn and underweight that these clipped coins went undetected. The yellow traders bought clippings direct from the public and offered a premium to anyone who would lend them legitimate gold coin of sufficient quality to clip. Payment was made in clipped or counterfeit coin, thereby enhancing the acceptability of that coin in local circulation, while generating popular support for the yellow trade in the region. Local participation in clipping meant that good-quality guineas were drawn into Yorkshire from across the nation. Good money followed bad and Yorkshire set the pace for the debasement of the national coinage.

The coin most commonly manufactured from gold clippings by the Yorkshire coiners was not, however, the British guinea, but the Portuguese moeda, known in England as a moidore. At the end of the 17th century, alluvial gold was discovered in the remote inland South American province of Minas Gerais, on the frontier of the Portuguese colony of Brazil. There followed a 60-year gold boom. Tens of thousands, possibly hundreds of thousands, of enslaved Africans were taken to Minas Gerais to dig and pan the gold, which was minted into Portuguese coins, either in Brazil or in Lisbon. Most of those coins were then exported to settle Portugal’s extremely unfavourable balance of trade with Britain, its principal supplier of wool and worsted textiles. This flood of Portuguese gold helped establish the British gold standard. Indeed, so much Portuguese coin was imported to Britain that in 1742 moidores were described as ‘in great measure the current coin of the Kingdom’. Yet moidores remained a foreign currency, so counterfeiting or clipping them was not high treason, but a non-capital offence.

Integration into the global economy was a mixed blessing. Access to new markets went hand-in-hand with economic vulnerability to wars or international financial crises. The Yorkshire yellow trade arose as an extreme local response to one of those crises. In the mid-1760s around Halifax, in Yorkshire’s worsted textile manufacturing district, a severe local cash shortage meant that coins worn or clipped to an extraordinary degree, by as much as a quarter, had begun to be accepted in payment. Elsewhere they were scorned as ‘Yorkshire guineas’ and refused, but locally, as one official complained, ‘the want of cash … gave a currency to everything that bore the face of a guinea’. The shortage arose from the local worsted industry’s overwhelming dependence on markets across the Atlantic, especially in Britain’s North American colonies. American demand collapsed with the end of the Seven Years War. The start of the disputes that were to lead to the American Revolution only made things worse. New orders dried up and American customers found themselves unable to pay for goods already supplied on credit.

The worsted industry was a flourishing newcomer in this part of Yorkshire. During the first half of the century it grew exceptionally quickly from very small beginnings. By 1770 Yorkshire accounted for roughly half the nation’s production of worsted cloth. Most of its output was exported. Faced with ruin in the mid-1760s, the businessmen who ran the region’s many small-scale textile enterprises seized the opportunity offered by the intense local cash shortage and led the turn to the yellow trade.

Like the global trading networks of which it formed a part, the yellow trade was run by men who already possessed cash and credit. As Samuel Johnson had pointed out in his observations on commerce only a few years before, ‘the chief of the means of trade is money’.

John Styles is Professor Emeritus in History at the University of Hertfordshire and Honorary Senior Research Fellow at the Victoria and Albert Museum.