Hartlepool and Wallsend seem to be the most commonly mentioned places where a monkey aboard a French (ie enemy) ship was mistakenly believed to be a Frenchman by locals who had never actually seen either a Frenchman or a monkey before. Being an �enemy alien', so to speak, the poor creature was summarily hanged as a spy!
However, this sort of story exists in various places around the British coast, including as far up the coast as the village of Boddam in the north-east of Scotland. People from neighbouring villages used to chant: "The Boddamers hanged the monkey-o!"
The idea is that it is just a 'friendly' insult, usually bandied about between rival communities. Some believe it to be a true story and others just an urban legend. Given how many places it is supposed to have �actually' happened in, I would tend to opt for the latter explanation.