The postal order evolved from the money order, which had been established in 1792. The Money Order system offered a secure means of transmitting money in the post, but high fees meant that this service was only available to businesses and the wealthy. An alternative method which attracted low rates of commission was sought but the Post Office did not want to promote anything resembling a low paper currency. Under the Post Office (Money Orders) Act 1880, the issue of postal orders received statutory sanction. Arrangements were made by the Post Office for the renowned paper maker, Portals of Laverstoke, to supply the base paper which would be printed by the Bank of England.
The United Kingdom was the first country in the world to use postal orders. They were issued on 1 January 1881 and given their popularity it was soon found expedient to extend their use. Exactly a year later postal order usage extended to Gibraltar and Malta, both of which were at the time under the control of the Postmaster-General. The first issue of postal orders came in ten denominations and could be purchased at the post office. They could then be sent in the post and redeemed by the recipient at their local post office The paper incorporated a watermark which read ‘Postal Order / One Shilling’ which acted as a counter forgery device.
After three years a new series of postal orders were introduced in which the number of denominations was increased to 14. A provision was also added to permit the affixing of postage stamps to the orders to reach specific amounts. From this point, postal order usage spread to India and Hong Kong.
With the increased use of postal orders came the need for further paper production capacity. The first step in the expansion of Portals, the paper maker, was the acquisition of Bramshott Mill, at Liphook, Hampshire. Bramshott had an excellent paper machine, which was practically new (only 2 years old) and was the same type of machine as the one at Laverstoke which made the Postal Order paper. The plan was to devote this mill to satisfy demand. At first the mill only operated on a single shift basis but after the First World War the mill operated continuously on a three-shift system employing from 80 to 100 people. Portals however, left at the end of their lease in 1924 and duly purchased Stowford Mills at Ivybridge.
When the First World War broke out, there were concerns about what effect the conflict may have on the circulation of currency. To allay concerns, the Government declared that from 10 August 1914, postal orders could be used as legal currency. This meant that they could be used directly in payment for products, rather than needing to be exchanged for cash at a post office. The fears around the circulation of currency did not materialise so on 3 February 1915 postal orders ceased to be legal tender.
In 1923 the contract for the printing of postal orders was secured by McCorquodales at Wolverton. The annual issue of postal orders increased from that point from around 100 million to 350 million, much of the increase in demand due to the popularity of the Football Pools.
In 1927 the Post Office decided to introduce postal orders of a reduced size. The previous forms measuring 8¾ inches in length, including the counterfoil, were reduced to less than 7 inches. The number of spaces where postage stamps could be affixed to increase the amount of the order was also reduced from three to two.
By 1930, Portals, who had successfully supplied postal orders since their conception, re-evaluated their business activities and sold many of their mills, including Stowford Mill, to Wiggins Teape (1919) Limited. Between 1924 and 1930, postal order paper had been manufactured at Joynsons Mill, at St Mary Cray in Kent, and also at Roughway Mill in Kent, but after 1930, Wiggins Teape decided to transfer the whole contract to Stowford Paper Mill in Ivybridge, having other plans for Joynsons and Roughway Paper Mills.
Postal order paper continued to be made at Ivybridge for the next few decades but during the postal strike of 1971, the companies who operated the Football Pools had to appoint local collectors to deal with the coupons as well as the money, given the unreliability of the postal system. When the strike was over and postal services resumed, the use of Pools collectors continued which prompted a massive decline in postal order use.
In the mid-1990s the postal order experienced a short-term renaissance with the launch of the online marketplace eBay. Postal orders served as a convenient and safe way to pay for goods purchased online. However, e-solutions soon superseded this paper based-payment method, so the increased demand was short lived.