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For most of the 20th century - until 1983 to be precise - there was no pound coin in Britain. Instead there were paper bank notes and even these were phased out the following year.
The end of the pound note was of course due to inflation. A pound was no longer a great deal of money for ordinary people, so it was sensible to replace it with a more durable and easily handled coin.
For more on the buying power of the old money, put inflation into the above search box.
Pound notes and indeed ten shilling notes had huge buying power in the early 20th century. For example an entire family could be fed and housed - albeit in the London slums - for just a pound a week.
Even when I was growing up in the late 1940s, I heard of a young woman starting work at the wage of £3 a week. My grandmother was horrified that anyone so young and with no qualifications could possibly earn so much.
The only notes that I ever saw were pound notes and ten shilling notes. They could readily be seen in shops as customers handed over money and received their change.
£5 notes also existed, but it is a measure of inflation that I never saw one in use. The one illustrated here, dated 1944, was photographed in a museum. These pound notes were extremely elegant with black scrolls on a white background and they were larger than the pound notes.
English and Welsh banknotes, issued by the Bank of England, were little seen in Scotland - with the one exception of the 10 shilling note. Scottish banks (and Irish too) had royal charters to issue their own notes. These notes were unpopular in England probably due to their unfamiliarity and variety. As a result of bank amalgamations there were numerous different notes in circulation when I was young. (I was born in 1935.) Examples were British Linen Bank, Clydesdale Bank. North of Scotland Bank, Clydesdale and North of Scotland Bank, Union Bank of Scotland, Bank of Scotland, Royal Bank of Scotland, Commercial Bank of Scotland, National Commercial Bank of Scotland. These are those I remember. There may have been more and probably were before then.
All the various pound notes were about the same size, with 10 shilling notes slightly smaller and Scottish larger denominations larger. The Bank of England 'fivers' and higher were much larger - see the photo above - and had to be double-folded to fit into a wallet. This became a problem when inflation brought them into common use, resulting in size reduction along with colour printing. Ease of forgery of the simple black on white also no doubt played a part in the change.
I understand that blind people could tell the denomination of a note by butting it against the cleft between the ring and middle fingers to detect its thickness.
When the pound coin replaced the banknote many people preferred to use the Scottish notes rather than the coins.
The wallet shown in the pictures was my grandfather's. I found it with his things much later with other things dated 1939.
The markings show that it would accommodate at least one £5 note. For several decades after 1939, men's wallets would have had similar slots, with slots like these for pound notes and 10 shilling notes.