In 1781 the B.O.E issued a charter which backed all notes by gold reserves. This was subsequently rescinded as there was not enough gold owing to the habit that people of the time had of going to the bank and exchanging their notes & coins every time that a war looked imminent. This was done because there is a finite source of gold so it holds it's value in times of hyper inflation. You still hear the 19th century expressions of 'a flight to gold' and 'gold standard' in currency markets etc.