The table at right shows the British coins in common use until the introduction of the two shilling Florin in 1849. Copper coins are shown in red, silver in blue, and gold in brown. The British names and values are given on the left. The values in American dollars based on the weight of the Gold Dollar as of 1837 are listed on the coins. On the right, the names and values are given for the pre-Revolutionary French coins that corresponded in metal, size, and value to contemporary British coins. Modern French equivalents in Francs and centimes are also given (which system is now moot with the replacement of the Franc by the "Euro" in 2002). Only the 1 sou (spelled "sol" at the time) and 2 sous coins survived, as the 5 and 10 centimes, into modern French coinage, retaining sizes comparable to the British half-penny and penny until after World War I. Similarly, even though Canada adopted the American dollar, Canadian cents and half cents were matched in size to British half pennies and farthings (at that point bronze rather than pure copper) until after World War I. Long after the decimalization of French coinage in 1794, a 5 centimes continued to be called a "sou."
Both systems of coinage reflect the Mediaeval system that began with Charlemagne. The basic coin was originally Charlemagne's silver denarius, "denier" in French, "penny" in English, and "Pfennig" in German. This represented an abandonment of the late Roman and Byzantine gold coinage -- a retrenchment for a cash poor economy. The earliest weights are preserved in the English system of Troy weight: The "pennyweight" (dwt) of 24 grains (the same grain as in avoirdupois weight) was the original English penny, such as found in the reign of Alfred the Great (871-899). Symbolizing the penny with the letter "d" was an artifact of the coin's name in Latin. For a long time the silver penny and the half-penny (given the Greek name "obolos" by Charlemagne) were the only coins in circulation in Western Europe. Twelve pennies (pence) "theoretically" would equal a solidus ("sou" in French, "shilling" in English, and "Schilling" in German), the standard Roman/Byzantine gold coin, but this was only a "unit of account," to which there corresponded no actual coins until the Renaissance. The first full shilling was minted by Henry VII in 1504. In Troy weight, 20 pennyweights is a Troy ounce, or 31.1034768 metric grams. Twelve ounces is then a Troy pound, 373.2417216 grams. Twenty shillings would also equal a Troy pound [note], which as a unit of account is then the "Pound Sterling," based as the coins were on Sterling silver, 92.5% (37/40) pure. The pound was symbolized with a special "L" (£), from Latin libra, even as the French word for "pound" was "livre" (and a pound weight abbreviated "lb."). The old English coinage thus is called the "£sd" system, as opposed to the recent decimal "£p," pounds and (new) pence.
Even as financial pressures lead modern governments to "monetize" their debt by excess money creation, governments before the era of paper money and credit resorted to debasement and cutting the weight of coins. This occurred both in England and France, but the debasement went much faster in France. By the time of the coinage represented above, it took 24 French deniers, or 2 sous, to equal just 1 English penny. The process by which English silver coinage shrank is represented in the following table. By the time of Edward III in 1344, the silver penny was already down to 20 grains from the 24 grain ideal pennyweight. After two centuries, it has shrunk to half that. Henry VIII's 10 grain penny of 1544, however, was for the first time also debased -- no longer Sterling silver. The Sterling standard was restored under Edward VI, though with a further loss in weight. Nevertheless, in the long run the tiny pennies were inconvenient, and in 1672 an official copper coinage was introduced for the smaller values. Silver pennies, however, survive in the ritual "Maundy Money" that the Queen still hands out to the elderly, in lieu of washing the feet of the poor, on Maundy Thursday.
Under Edward VI the first silver "Crown" of 5 shillings was also introduced.
|Troy Ounce weight of a Crown (5s)|
|Edward VI||1551||Crown=1 oz|
|George III||1816||Crown=10/11 oz|
Things finally stabilized under Elizabeth I, who established a weight that would remain constant for two centuries, as Britain grew into a Great Power. The slight reduction under George III simply attended the adoption of the Gold Standard: so as to prevent fluctuations in the value of silver from giving silver coins, which had become tokens of gold value, greater than face value. When a brief surge in the price of silver after World War I did give silver coins a greater than face value, the silver content was cut to 50%, without changing the weight. Similarly, silver was completely replaced by nickel-copper after World War II.
In 1849 a new silver coin was introduced, the "Florin," worth 2 shillings. Since this was l/10 of a pound, the idea was that it was the first step in the decimalization of British coinage. The process, as it happened, only took 122 years. The Half Crown was at first replaced by the Florin, but after a hiatus of 20 years was reintroduced.
|The Sterling (37/40 Ag) Silver Penny|
|Alfred the Great||24||240||1.5552|
|Henry VIII||1526||10 2/3||540||0.6912|
|Edward VI||1551||8||720d or 60s||0.5184|
|Elizabeth I||1601||7 23/31||744d or 62s||0.5017|
|George III||1816||7 3/11||792d or 66s||0.4713|
Thus, from 1558 to 1670, we see a steady process of cutting the weight of the pound coin, or briefly marking up its value. The coin also acquired names during that period. James I dubbed the coin a "Unite," to commemorate the uniting of the thrones of Scotland and England in his person (the Kingdoms and their governments were not formally united until Queen Anne). Later, under Charles II, the coin came to be called a "Guinea," since gold at the time was coming from the Guinea coast of Africa, where eventually a British colony would be established actually called the "Gold Coast" (now Ghana).
During the wars of Louis XIV at the end of the 17th century, the value of gold fluctuated wildly, so that the gold coin was even marked up to 30 shillings at one point. By the end of the reign of William III, however, it settled down to 21 shillings 6 pence, where it remained through the reign of Queen Anne. By the reign of George I, this was seen to be overvalued. Sir Isaac Newton, who by that time had been made Master of the Mint, recommended that the coin be valued at 20 shillings 8 pence. Parliament rejected this odd number, and set the Guinea at 21 shillings, which was then slightly overvalued. This would tend to draw gold into Britain, where it could be sold for a profit in silver. While that might tend to draw silver out of Britain, the Mercantilist ideology of the era, which saw gold as wealth and its possession as an end in itself, would favor such a trend.
After the Napoleonic Era, it was proposed that all the complications with the relative values of gold and silver could be avoided if silver were, in effect, demonetized. Silver coins would simply become tokens for their face value in gold, regardless of the intrinsic value of silver (so long as this was less than the face value!). This idea was the "Gold Standard," and it was adopted by Britain with the slight reduction in the size of the silver coins in 1816 and the introduction of a new gold pound coin, the "Sovereign," in 1817. The value of gold in pounds Sterling, however, remained the same, and the Sovereign was simply cut down proportionally from the weight of the Guinea. Guinea coins, therefore, might continue in circulation with their traditional value of 21 shillings [note]. As it happened, even as the actual Guinea coins must have passed out of ordinary use, the "Guinea" as a unit of value survived: Objects of particular value, like jewelry, or professional services, as for a lawyer (or, ironically, prostitutes), might be expressed in Guineas rather than pounds. This can still be seen, of all places, in the Beatles movie A Hard Day's Night , where a gambling debt is discovered to be, not £100, but 100 Guineas (£105). The Guinea even survives into the decimal coinage, as £1 5p.
Few £5 gold coins were ever minted for circulation. The greatest shame in that respect was Queen Victoria's first £5 coin of 1839. The famous "Una and the Lion" design of the reverse makes it one of the most beautiful coins ever minted. Only issued in proof, the 1839 £5 was listed in 1988 by Seaby's catalogue as worth £15,000. Later, all gold coins came to feature a standard design of St. George slaying the dragon. Since no special name was ever proposed for the £5 coin, a departure from tradition, one wishes the 1839 design had been continued and the coin perhaps dubbed the "Lion." The motto DIRIGE DEUS GRESSUS MEOS on the reverse means "May God Guide My Footsteps."
The allusion of "Una and the Lion" is to The Faerie Queene by Edmund Spenser (1552-1599). Una personifies Truth (Una Veritas, "One Truth"). The Lion finds her sleeping in the woods and prepares to eat her, but then is tamed by her beauty and becomes her protector. On the coin, Una looks like Queen Victoria. Una is the companion and intended of the Redcrosse Knight. The Knight turns out to be St. George, the patron saint of England, whose Red Cross appears on the flag of England. The image of "Una and the Lion" thus already implies a strong association with England, reinforced when we think of the Lion itself as symbolic of England -- though the Lion ends up getting killed by the evil Knight Sansloy ("Without Law") -- perhaps just like today, as the English people, disarmed by a faithless Government and even forbidden to defend themselves, begin to be overwhelmed by lawlessness.
In the following table, it is noteworthy that in 1619, 1663, and 1817 the coin is reduced in weight in precisely that ratio that will restore it to a value of twenty shillings, i.e. one pound. Thus, these are points where the value of gold actually did not change, and apparently was not expected to. The greatest fluctuation here in the value of gold was during the War of the League of Augsburg, which witnessed the time of Glorious Revolution in Britain (1688) and the formation of a Grand Alliance between Britain, Austria, and Hapsburg Spain to foil the ambitions of Louis XIV of France. In the midst of this, the Bank of England was founded in 1694, largely to help the Government with its finances. This apparently worked so well that we see a stable currency during the great War of the Spanish Succession (1701–1714). In the aftermath of that War, as we have seen, the Guinea was pegged at 21 shillings, and this actually remained the benchmark of the value of gold for two centuries, i.e. all the way to World War I, and it was not definitely abandoned until Britain went off the Gold Standard in 1931.
|The 22 Carat (22/24 Au) Pound Coin|
|Reign||Year||Value||Name||weight, grains||number/troy lb||weight, grams|
|Edward VI||1552||20s||[none]||174 6/11||33||11.3104|
|1601||20s||171 63/67||33 1/2||11.1415|
|James I||1604||20s||"Unite"||154 2/7||37 1/3||9.9975|
|1612||22s||154 418/491||37 13/66||10.0342|
|1619||20s||140 380/491||same x 11/10 =|
|1663||20s||"Guinea"||131 29/41||same x 16/15 =|
|1670||20s||129 39/89||44 1/2||8.3875|
|William & Mary||20-30s||same||War of the League of|
Augsburg (Nine Years War),
|William III||1696||28s, 26s, 22s||same|
|George III||1817||20s||"Sovereign"||123 171/623||same x 21/20 =|
During the French Revolution and Napoleonic Era, Parliament had instructed the Bank of England to stop redeeming its notes in gold. The Government used the gold thus diverted to finance the enemies of France. One whole minting of Guineas was intended for Spain. The Bank then issued 1 and 2 pound notes. With the restoration of the gold coinage, and the withdrawal of those notes, there was a deflation that must have at least helped set off the economic downturn of the early 1820's. Notes were temporarily reissued, but eventually the economy found its footing; and for the rest of the century the Bank issued nothing smaller than £5.
A similar scenario played out with World War I. Gold payments were immediately suspended in 1914, and the Treasury itself began issuing £1 and 10 shilling legal tender notes. After the War, it was expected that the Gold Standard would be restored, and this was implemented by Winston Churchill, as Chancellor of the Exchequer, in 1925. However, this suddenly deflated the pound Sterling from $4.40 to $4.87 in American dollars, which set off an economic shock. On top of a brief economic downturn, moreover, was the response by organized Labour of a General Strike. Although both the monetary and civil situation soon righted themselves, the Bank of England was given permanent powers in 1928 to issue its own £1 and 10 shilling notes. These became the first notes issued by the Bank of England in proportional sizes and different colors. Until 1957, larger notes continued in the traditional black and white color, large format size, and blank reverse (though all notes larger than £5 were suspended during World War II because of German counterfeiting).
The Gold Standard and the Sovereign had ruled over the majestic days of the Pax Britannica, but the Great Depression finally killed them, both abandoned in 1931. Argument still continues over whether this was really necessary; but it is clear that regimes of credit money have allowed governments to institute a new, hidden, and deceptive form of debasement. People, politicians, academics, and the press, have even come to believe that inflation is caused by economic growth. This, for governments, self-serving misdirection persists despite its decisive refutation by Milton Friedman and Anna Jacobson Schwartz in their monumental A Monetary History of the United States, 1867-1960 [Princeton University Press, 1971]. The United States Federal Reserve System, on the other hand, under Paul Volker and Alan Greenspan in the 1980's and 90's, seems to have been driven by a combination of market pressures and growing understanding (Greenspan was an associate of the very much Hard Money Ayn Rand) to rein in the pace of money creation.
The Bank of England
British Coinage of India, 1835-1947
Philosophy of History
|Troy Pound||12 Troy Ounces||lb.t.||0.3732417216 kg|
|Troy Ounce||20 Pennyweight||oz.t.||31.1034768 g|
|Pennyweight||24 Grains||dwt.||1.55517384 g|
Return to Text
Units of Measurement
Philosophy of Science
When I began collecting British coinage, many of the sources seemed to be uncertain about the actual weight of the Sovereign, both in customary terms and in metric. The former depends on the formula for coinage, the latter on the conversion between metric and Troy weight. I had some small difficulty getting the story straight. In 2013, with gold as high as $1700, it may be a matter of some concern be accurate and precise.
The Sovereign is exactly 123 171/623 grains in weight. Since this is 22 carat gold, or 22/24 gold, the actual weight of gold here will be less. Multiplying 123 171/623 by 22/24 get us 113 1/623 grains. This will be exactly 7.322389841 grams. Of course, the market price of gold is in Troy ounces. The gold in the Sovereign is 440/1869 or 0.235420011 Troy ounces, or at $1700 an ounce, $400.21. Since there are 960 farthings to a Pound Sterling, even the humble farthing, on the principle of the Gold Standard, would now be 42¢. The shilling comes out at $20.21. You could buy a meal for a shilling in Victorian England, and this would still get you a reasonable meal even now -- when a Big Mac meal at MacDonald's is just over $6.00 (it was only $2.00 when I bought it at the MacDonald's in Waikiki, on Kalakaua Avenue, in Honolulu in 1972 -- for that we need the deflator). Since the gold content of the 1837 United States dollar was 23.22 grains, on the Gold Standard the Pound Steriling was worth $4.866563529, or $4.87.
As noted, the Sovereign is proportional with the same value of gold as the Guinea. Since the Guinea was 129 39/89 grains in weight, the actual gold content was 118 174/267 grains. This is 66/267 Troy ounces, or, at $1700 an ounce, $420.22 on the Gold Standard. In 1837 U.S. dollars, the Guinea would be worth $5.109891705, or $5.11.
While it is reasonable now to round off dollar values to the nearest cent, the smallest British coin in common usage in Britain was the farthing, which was worth 1/2¢; and for half a century the United States minted half-cents. Canada briefly used half-cents also, in some provincial coinage. So one might wonder what the value of the Pound Sterling or the Guinea would be to the closest half cent. This can be accomplished by multiplying the full decimal value of the quantity by 200, adding 0.5, abstracting the integer portion of the value, and then dividing by 200. Thus, the Pound Sterling is $4.866563529; multiplying by 200, we get 973.3127057; adding 0.5, we get 973.8127057; the integer portion is 973; and 973 divided by 200 is 4.865. Thus, the value of the Pound Sterling to the nearest half-cent is $4.865. Following the same procedure with the Guinea, it rounds out to $5.110, so the nearest half-cent is actually a full cent.
Return to Text
United States coinage, established on the first modern decimal plan, underwent several changes. In part this was the result of the familiar problems of bimetalism with the relative values of gold and silver; in part it was through some efforts at rationalization and simplification; and eventually it was because of political conflicts over the Gold Standard.
The first official coinage, of 1792, was based on gold coins of the traditional British fineness of 22 carat gold and a precise ratio of gold to silver of 15:1. With a gold Eagle ($10) of 270 grains and a silver Dollar of 416, this resulted in a very odd fineness for the silver coins: the dollar would be 24.75 grains of gold or 371.25 grains of silver; and 371.25 grains of silver in a 416 grain coin gives a fineness of 0.892427884.
Although there was a gold strike in Dahlonega, Georgia, in 1828, the relative value of gold seems to have increased, and the gold content of the Eagle was cut down in 1834 to 232 grains. This gave a ratio of gold to silver of almost, but not quite, 16:1 (16.00215517). It also resulted in a peculiar fineness for the gold coins, since the total weight of the Eagle was set at 258 grains: 232/258 = 0.899224806.
In line with an urge for continued reform in the direction of decimalization, inspired by the French, the whole gold and silver coinage was reworked in 1837 on the basis of common 90% fineness. The Eagle was set at 258 grains, and the silver Dollar at 412.5. The dollar in gold was thus 23.22 grains, and in silver actually continued the 1792 content of 371.25 grains. This system now produced its own odd number in the form of the ratio between gold and silver, which was again almost, but not quite, 16:1 (15.98837209).
The gold content of the dollar survived until the end of the Gold Standard. Since the gold content of the Pound Sterling was set at 113 1/623 grains when the Guinea was pegged in 1717, this put the pound at $4.866563529, which would be $4.865, while the US half cent was still in use, or $4.87 thereafter. The dollar in pounds would be 4 shillings 1 1/4d (i.e. a penny and farthing -- sometimes called a "bicycle," after the 19th century bicycles that had one large and one small wheel). Hence, for many years the Canadian silver Dollar was comparable in size to the briefly issued British 4 shilling (Double Florin) coin.
The gold silver ratio was strongly upset by the California Gold Rush. By 1865, California had produced $785,000,000 in gold, something like $11.8 billion in 1995 dollars -- not enough to save Social Security in the 1990's, but a tremendous sum in the far smaller economy of the 1850's and 60's. Thus, with gold more plentiful and less valuable, in 1853 the silver content of the dollar was cut down to 345.6 grains, which would give a 384 grain Dollar coin (16 dwt, or 0.8 troy oz.), except that Dollar silver coins were not even minted. Instead, for the first time Double Eagle ($20) gold coins were minted. (There were also, briefly, gold Dollars, but these were so small as to be impractical.)
The next important event was the Civil War, when the Treasury suspended gold payments. Instead, legal tender notes ("Greenbacks") were issued. Although the government thus contrived to pay its gold obligations in paper, gold dollars continued to circulate at a premium in the private economy. In 1865, a gold dollar was worth $2 in greenbacks. By 1867 this was down to $1.383. The goal was to deflate the greenbacks until they traded at par with gold dollars and the Treasury could comfortably resume gold payments. This was not achieved until 1878.
Meanwhile, the deflation had been causing economic and political trouble. The Greenback Party, heavily peopled with indebted farmers, liked the idea of paper money inflation, which reduced the real value of debts, while the deflation was actually increasing the real value of debts. This political pressure at least slowed down the withdrawal of greenbacks. However, a fateful step was taken in 1873, sometimes called the "Crime" of 1873, to adopt, in principle (since gold payments had not resumed), Britain's apparently successful Gold Standard. This was accompanied by the adoption of metric weights for the silver coins. Since the 1853 weight of a silver Dollar would have been 24.8827888 grams, the silver coins were all set proportional to a 25 gram (.9 fine) dollar in 1873. No silver Dollar was issued. (Also, the old silver half dime was now abandoned -- the nickel five cent piece, suitably called a "Nickel," was more convenient.)
The insult to silver (with its Western mining interests), and the threat of continued deflation as silver could no longer contribute to monetary expansion, set off one of the great political movements in American history: Free Silver. In a concession to this movement, when gold payments were resumed in 1878, Congress instructed the Treasury to buy and mint a steady supply of silver. This was not entirely consistent with the Gold Standard, but no one should ever expect politics to be consistent. In addition, the silver Dollars to be minted were not even to be on the metric standard of 1873, or even on the earlier standard of 1853, but actually the old 412.4 grain coins of 1837. The Free Silver forces demanded a ratio of 16:1, and 1837 was the last time anything near that had existed. Thus, the classic American "Morgan" dollars that came to be minted were anachronistic in both conception and in content.
The Gold Standard achieved victory in four stages: (1) in 1893 the Democratic President Grover Cleveland turned against silver and got important silver purchase laws repealed; (2) in 1896 the overtly Free Silver Democratic candidate for President, William Jennings Bryan, who compared the Gold Standard to the Crucifixion, was defeated; (3) in 1900 the Gold Standard was reaffirmed; and then (4) in 1904 the Treasury finished minting its previously purchased silver and suspended minting silver Dollars. Nevertheless, as in Britain, the Great Depression ended the Gold Standard, though gold was retained until the 1970's for payments to foreign governments. Gold coins were withdrawn from circulation, but silver token coinage was retained until 1964. Silver coins were not worth more than face value until the inflation of the 1970's.
|United States Gold and Silver Coins|
|Bimetalic Standard||Gold Standard|
|same||20 5/8 gr|
|same||41 l/2 gr|
|38.4 gr||2.5 g||same|
|96 gr||6.25 g||same|
gr .9 Ag
|192 gr||12.5 g||same|
|same||412 1/2 gr|
|412 1/2 gr|
|$Ag||371.25 gr||same||same||345.6 gr||22.5 g||mixed|
|$Au||24.75 gr||23.2 gr||23.22 gr||same||same||same|
|67 1/2 gr|
|64 1/2 gr|
Philosophy of History
The following table gives some simple ratios to adjust prices for more than a century from 1891 to 2011. Milton Friedman estimates [in Money Mischief, 1992] that the value of the United States dollar had inflated by about a factor of 15 from 1891 to 1990 -- this now looks like a factor of 20 from 1891 to 1999. However, 1891 is not the most representative year to use as a benchmark, since it is close to the deflationary trough of the 1890's.
|Simple Ratios to Deflate Prices|
In keeping with the rough and ready nature of this table, I have extended it to 2010/2011 on the simple principle that prices are about double what they were in 1983. So what cost $1 in 1891 now costs $24 -- or a dollar now is only worth about what 4¢ was in 1891. Although inflation was supposed to have been defeated under the Reagan Administration, it still does not seem nearly as defeated as it would have been under the Gold Standard. Since the Federal Reserve is continuing to create massive amounts of money in the wake of the 2008 collapse of the mortage market, there is no telling if and when explosively full scale inflation may return. The threat is real.
In 2012, on the eve of the Presidental Election, the Federal Reserve has decided to pump yet more money into the economy -- QE3, or the third round of "quantitative easing." Something between 60% and 75% of Federal debt is now being bought by the Fed, with the money created ex nihilo to do it. Although gasoline and food prices are obviously up, no authority has yet admitted that there is anything like a general inflation. The Keynesians, whose predictions failed in the development of the economy after 2009, are still hoping that inflation will save them -- and, indeed, in a kind of desperation, the Keynesian "multiplier effect" has now been dropped (except from President Obama's political rhetoric) and we see bizarre, naked appeals to the power of inflation to heal the economy. Weimar anyone? Say's Law remains the orphan of public discourse; and in the general stagnation or collapse of welfare state economies, it is not clear how much grief we must endure before wisdom prevails.
Sometimes I see strange examples of statements about historical prices. In a recent (12/2012) episode of How the States Got Their Shapes on the H2 Channel, it was stated that John D. Rockefeller had a net worth of 1.4 billion dollars in 1901, which would be worth 192 billion dollars now, almost three times as much as the current wealth of Bill Gates, at 66 billion. This implies inflation at a factor of 137, a multiple better than six times the estimate above -- 24x from 1891 to 2010. Such a figure seems way off the deep end. If we only used 24x, Rockefeller would only have 33.5 billion, about half of what Bill Gates has now. What could possibly give a number so large? Even if we reckon in terms of the gold value of the dollar, it doesn't get quite so high: $1.4 x 109 times 23.22 grains/dollar = 32.5 x 109 grains. This divided by 480 gr./troy ounce = 67,725,000 t.oz. As I write (12/13/2012), gold is almost exactly $1700 per ounce; so the value of Rockefeller's fortune in gold today would be $115.1325 billion. This is still not $192 billion, although it does beat Bill Gates handily. So I can't imagine where such a deflator came from.
Return to "American Dollars"
|1. John Kendrick||1694|
|2. Thomas Speed||1694-1699|
|3. Thomas Madockes||1699-1739|
|4. James Collier||1739-1751|
|5. Daniel Race||1739-1775|
|6. Elias Simes||1751-1759|
|7. Charles Jewson||1755-1777|
|8. Abraham Newland||1778-1807|
|9. Henry Hase||1807-1829|
|10. Thomas Rippon||1829-1835|
|11. Matthew Marshall||1835-1864|
|12. William Miller||1864-1866|
|13. George Forbes||1866-1873|
|14. Frank May||1873-1893|
|15. Horace George Bowel||1893-1902|
|16. John Gordon Nairne||1902-1918|
|17. Ernest Musgrave Harvey||1918-1925|
|18. Cyril Patrick Mahon||1925-1929|
|19. Basil Gage Catterns||1929-1934|
|20. Kenneth Oswald Peppiatt||1934-1949|
|21. Percival Spencer Beale||1949-1955|
|22. Leslie Kenneth O'Brien||1955-1962|
|23. Jasper Quintus Hollom||1962-1966|
|24. John Standish Fforde||1966-1970|
|25. John Brangwyn Page||1970-1980|
|26. David Henry Fitzroy Somerset||1980-1988|
|27. George Malcolm Gill||1988-1991|
|28. Graham Edward Alfred Kentfield||1991-1998|
|29. Merlyn Lowther||1999-2003|
|30. Andrew Bailey||2004-2011|
|31. Chris Salmon||2011-|
A major reason for chartering the Bank was to provide a means for the Government to easily borrow money. This created the modern "National Debt" and was immediately of use in financing the great wars of the era, first of all the War of the League of Augsburg (1688-1697) and then the War of the Spanish Succession (1701-1713). This soon gave the impression, to friends and foes alike, that Britain had unlimited resources of money. How this could be so was long mysterious and a matter of incomprehension to many observers from then to the present. Thus, when Alexander Hamilton tried to organize the finances of the new United States of America on a basis similar to Britain's, his political enemies, like Thomas Jefferson, thought it was all just a scheme to make money for Hamilton's speculator friends. While in general Jefferson was politically wiser than Hamilton, his insight was here compromised by an ancient incomprehension and suspicion of finance. Indeed, a general incomprehension and suspicion continue, especially among the liberally educated who neither know nor care about money, but think they know enough (or simply know Marxism). The British financial system was strained at times, as in the Napoleonic Era, but really only failed with World War I.
The Bank of England basically invented several features of modern banking and modern money. Paper money had been tried before, most interestingly by the Mongols and the Chinese, but the temptation to over-issue was always overwhelming. The Bank of England, however, was under the discipline both of private ownership (protected in some measure from the irresponsible actions now all too familiar in governments) and of an obligation to redeem its notes in gold. These notes were at first of various kinds, and were originally in deposited amounts, not in standard denominations. The modern idea of a banknote of round value, payable to the bearer, evolved slowly. Standard denomination notes were issued in 1725, from £20 to £1000. In 1759 £10 and £15 notes were introduced, but £5 notes only appear in 1793.
These were actually tremendous amounts of money at the time. Even £20 would be something like $1500 in 1995 dollars. So Bank of England notes were not items of daily life for most people, but only instruments of large financial transactions.
The first notes were issued to specific depositors, but soon the Chief Cashier, usually, "or bearer" was listed as the payee. After 1782 only the Chief Cashier "or bearer" was listed, and by the early 19th century, the Cashier's name was printed with the note and did not have to be entered in ink. In 1855 the notes were made simply payable to "Bearer," with a printed signature by the Chief Cashier.
Bank of England notes were not obligations of the Kingdom of England and betrayed no liability on the part of the government. They have never displayed any authorization but the signature of the Chief Cashier for the "Governor and Company of the Bank of England." No British monarch appeared on the notes until 1960, which means that Queen Elizabeth II is still the only monarch whose picture has ever appeared on the notes. Until 1928, the only image that appeared on the notes was a small vignette of a seated Britannia holding a spear and olive branch, flanked by a shield and, at first, a pile ("bank") of money, later a beehive. The plain and ulitilitarian nature of the notes is also manifest in the lack of color -- the "white" notes are simply black and white -- and the lack of printing on the back. All the white notes, all the way through the 1950's, were very large, but the paper was thin and sturdy, so they could be conveniently folded up.
Before Britain went off the Gold Standard in 1931, there were two important periods when the Bank suspended payments in gold for its notes. From 1797 to 1821 was the "restriction" period, when the Bank stopped payments in cash, for a while even by law, and then in 1816 slowly began paying out for smaller and then larger amounts. These restrictions were, of course, because of the wars with Revolutionary and Napoleonic France, when the British government wished to use the gold of the kingdom to subsidize allies. This tended to mean that all coin vanished from circulation, and for daily transactions private tokens came to be issued by businesses. The Bank itself began to print £1 and £2 notes. These continued to be issued until a full return to cash payments was made in 1821. However, the Bank responded to a credit collapse and financial panic in 1825 by issuing £600,000 in old £1 notes -- the last time the Bank issued such a denomination for a century.
The 19th century was the Pax Britannica, and the Pound Sterling, with Bank of England notes, were certainly the premier currency, and the soundest banknotes, in the world. The crisis that finally arrived to compromise this was World War I. In 1914, cash payments were again suspended, not to resume until 1925. This time the Bank did not issue its own notes smaller than £5, but the British Treasury did. "Bradburies," signed by Secretary to the Treasury John Bradbury (1914-1919), and later Norman Fenwick Warren Fisher (1919-1928), were 10s (i.e. 10 shilling = 1/2 pound) and £1 [reverse] notes. No £2 notes were issued. These were legal tender notes, such as the United States issued for the Civil War. Britain was all but bankrupted by the War, and only the financial, as well as military, help of the United States saved the day. After the War, the legal tender notes continued to be issued and the government did not wait, as the United States did, 1865-1878, to let the naturally growing economy deflate the paper issue. Instead, the Gold Standard was restored by Chancellor of the Exchequer Winston Churchill in 1925, abruptly deflating the Pound Sterling from $4.40 to $4.87. Perhaps Churchill did not think this was enough to make a difference, but the financial shock was felt in a struggling British economy, setting off a General Strike, and it did no good either to the reputation of Churchill or to that of the Gold Standard itself.
1925 is thus a good symbolic year to begin an examination of modern Bank of England notes. The Bank itself, of course, was issuing its traditional notes from £5 up to £1000.
|18. Cyril Patrick Mahon, 1925-1929|
|19. Basil Gage Catterns, 1929-1934|
|20. Kenneth Oswald Peppiatt, 1934-1949|
|21. Percival Spencer Beale, 1949-1955|
|22. Leslie Kenneth O'Brien, 1955-1962|
|£5||Portrait of Queen Elizabeth II|
|Portrait of Queen Elizabeth II|
|23. Jasper Quintus Hollom, 1962-1966|
|Portrait of Queen Elizabeth II|
|Portrait of Queen Elizabeth II|
|24. John Standish Fforde, 1966-1970|
|25. John Brangwyn Page, 1970-1980|
|Pictorial of Shakespeare|
|£10||£20||Pictorial of Duke of Wellington|
|£20||Pictorial of Isaac Newton|
|Pictorial of Florence Nightingale|
|26. David Henry Fitzroy Somerset, 1980-1988|
|Pictorial of Christopher Wren|
The colors of these notes were changed in 1940 to mauve and blue as an anti-counterfeiting measure in World War II. Since the Germans did actively begin to counterfeit Bank of England notes, all denominations larger than £5 were suspended after 1943. The £10 was not reintroduced until 1964 and a £50 not until 1981.
The Bank was nationalized in 1946 by the post-war socialist Labour government, and soon the Pound itself was devalued from over $4 to only $2.80. Although the Pound probably had been rather overvalued, this major devaluation introduced inflation as a weapon both of international trade and of social policy, supposedly making British products cheaper overseas and reducing the wealth of the wealthy. The former meant a return to Mercantilistic manipulations, and the latter an assault on private capital. Neither would help Britain much in the long run. The return of the Conservatives meant that the Pound would at least be stable -- in 1970 it was still $2.40 -- but a real reversal in socialist tendencies did not come until Mrs. Thatcher came to power in 1979.
The White Five did not last out the 1950's. A "modern" blue £5 was introduced in 1957, with a novel and appealing verion of Britannia on it. This "blue Britannia" is much admired, but it was not destined to last long. A portrait of the Queen finally appeared on Bank of England notes in 1960, and it was not long (1963) before a portait £5 replaced the Britannia 5. The next year, the £10 reappeared, with a portrait also.
By Bank of England convention, the colored Britannia 10s and £1 notes are now considered "Series A," the colored Britannia £5 note "Series B," and the Portrait notes "Series C." But there never would be a "Series C" note for £20. Having, evidently, gotten in the habit of redesigning the currency, it was hard to stop. In 1970 the first "Series D" note was introduced, a £20 "Pictorial" note with a new portrait of the Queen and an image of William Shakespeare (with Romeo and Juliet) on the reverse. As the £5 was blue, and the £10 brown, now the £20 would be somewhat purple.
The Pictorial £5, with the Duke of Wellington, introduced in 1971, marked another turning point in the history of British money. No 10s note was issued that year because Britain had switched from the traditional £sd (pounds, shillings, pence) system to the new decimal £p (pounds and new pence) system. The value of 10s was now in a 50p polygonal coin. After a Pictorial £50 note was introduced in 1981, it was not long before the £1 went the way of the 10s. A brass £1 coin had been introduced in 1983, and in 1986 the note was discontinued. The Pound Sterling had suffered the ravages of inflation in the 1970's, like the dollar. It ended up still maintaining a slight advantage, but the absolute value was still well below even the $2.60 of 1967 dollars. The Pound was just not valuable enough to continue wasting paper on (although in the United States the symbolic devaluation of going from paper to coin has so far prevented this from happening to the dollar). Thus, the Pictorial £1, with Isaac Newton, lasted only one year longer than the blue Brittania £5.
|20. Kenneth Oswald Peppiatt|
|21. Percival Spencer Beale|
|22. Leslie Kenneth O'Brien|
|24. John Standish Fforde|
|26. David Henry Fitzroy Somerset|
|27. George Malcolm Gill|
|29. Merlyn Lowther|
|30. Andrew Bailey|
This table presents links to a selection of representative recent Bank of England notes. Wartime 10s and £5 notes are given signed by Peppiatt; Britannias, including a white 5, for Beale; Portrait 10s and £1 and the blue Brittania 5 for O'Brien; four denominations of Portrait notes for Fforde; four of the Pictorial Series for Somerset; and a new £5 ("Series E") that was introduced under Gill, with an older portrait of the Queen and George Stephenson, with images of early British railroading, on the reverse. These are all from my personal collection, and the Fforde 10s and £1 are notes that I picked up out of circulation and brought home in 1970.
Only one Gill note is included here because I did not systematically extend my collection. I have now added a few notes of Lowther and Bailey that I picked up out of circulation on a trip to London in 2005. The designs have changed a bit again, and the tint of the £5 is now green, like the old £1, rather than blue.
The Bank of England is very touchy about reproductions of its notes, and, unlike the United States Treasury, holds copyright and requires permission for reproduction even if images conform to its anti-counterfeiting guidelines. Notes are produced here under an exception given in these rules:
These criteria do not apply to reproductions of notes for EDUCATIONAL PURPOSES ON FILM OR TELEVISION; such reproductions may be made without specific application being made to the Bank.
Images on the Internet are displayed on video monitors, i.e. televisions; so the images that can be accessed here are indeed "reproductions...for educational purposes on...television." Viewers, however, should be aware that simply printing out these images, however useless as counterfeits, may violate both British law and international copyright conventions.
Although these notes have been scanned in black and white, most have been given an overall tint that is similar to the original. This gives some notion of how the originals look, but it leaves out other original colors, which become a major element in the Pictorial Series. Thus, Duggleby's catalogue actually lists most Pictorials as "multicolored," though with the traditional color predominating. This does not apply, of course, to the white five given here, which is still much like all historical white Bank of England notes. The background watermark is obvious, but with a clear space for the security thread that was introduced in World War II. The actual day of issue, 9 June 1950 (I was eight months old), is traditional, and there is no reverse. The blue Britannia, by contrast, is dense with designs and images, including St. George slaying the dragon, and a lion with a key on the reverse.
The 1988 movie, Coming to America, with Eddie Murphy, features an image of a bank note of Murphy's African Kingdom that is identical in design to the Portrait £1 note -- although it is a £100 note, which of course doesn't exist in post-war British currency. While the African Kingdom of this movie ("Zamunda") is usually charcterized as entirely fictional (and was intended to be a "fairy tale" kingdom), there was in truth an African King who lived in a mountainous, highland domain, as shown in the movie, under British colonial rule. This was the Kingdom of Buganda, a protectorate in the British colony of Uganda which had long antedated the British presence. Sir Edward Muteesa II (1924-1969, shown at right) was the King (called the "Kabaka") of Buganda, 1939-1969, and the first President of an independent Uganda (1963-1966). The Kingship of Buganda was abolished with his death (as Uganda fell into the horrors of the regime of Idi Amin) but was then revived for Ronald Muwenda Mutebi II (son of Muteesa II), the current King, in 1993. So, Eddie Murphy's Kingdom is fictionalized, and bank notes were certainly never issued for Buganda, but it is not without some historical foundation. With the venerable monarchy of the former Empire of Ethiopia now gone, other African monarchies continue to exist in Southern Africa.
As Good as Gold, 300 Years of British Bank Note Design, V.H. Hewitt and J.M. Keyworth, British Museum Publications, London, 1987
English Paper Money, Vincent Buggleby, Spink, London, 1990
Standard Catalogue of British Coins, Coins of England and the United Kingdom, edited by Stephen Mitchell and Brian Reeds, Seaby, London, 24th Edition, 1988
Standard Catalog of World Coins, Chester L. Krause and Clifford Mishler, Colin R. Bruce II, Editor, Krause Publications [700 E. State St., Iola, WI, 54990], 1982 Edition
British Coins Before the Florin
Philosophy of History
In India the British took over the monetary system of the Moghuls. This was based on the silver Rupee and the gold Mohur, each of equal weight, which in British reckoning was 180 grains, 22 carat (22/24) fine for both metals. 180 grains is 11.6638 grams in metric weight, though I have seen this given as 11.6600.
|10 Rupees||10 Rupees||13s4d|
|5 Rupees||5 Rupees||6s8d|
|1/2 Rupee||8 Annas||8d||26|
|1/4 Rupee||4 Annas||4d||25|
|2 Annas||2 Annas||2d||24|
|1 Anna||4 Pice/12 Pies||1d||23|
|1/2 Anna||2 Pice/6 Pies||1/2d||22|
|1/4 Anna||1 Pice/3 Pies||1/4d||21|
|1/2 Pice||1/2 Pice/11/2 Pie||1/2 1/4d||20|
|1/12 Anna||1 Pie||1/3 1/4d|
The Mohurs were not really minted for circulation. India was on a Silver Standard, using the Rupee. Since the market value of silver varied against gold, upon which the Pound Sterling was based, this complicated the exchange rate. That especially became a problem in the 1880's. The Rupee was pegged at 1s61/2d from 1889 to 1890, at 1s6d from 1890 to 1891, 1s43/4d from 1891 to 1892, and 1s3d in 1892. This messiness was ended when the Viceroy, Lord Landsdowne, effectively put India on the Gold Standard in 1893 by pegging the Rupee at 1s4d, so that 15 Rupees, the traditional Mohur, became equal to exactly one Pound Sterling. This value of the Rupee survived all the way until 1966, when India revalued its currency independent of the Pound Sterling.
In the table at left, the coins are color coded: Yellow for gold; blue for silver; gray for copper-nickel; and red for copper or bronze. The copper-nickel coins were an innovation. Originally, there was a bronze 1/2 Anna, a silver 2 Annas, and simply no 1 Anna. The bronze 1/2 Anna was discontinued for circulation after 1878. The first copper-nickel 1 Anna was introduced in 1907. The silver 2 Annas was ended in 1917 and the copper-nickel 2 Annas started the following year. When the value of silver jumped briefly after World War I, 4 Annas and 8 Annas copper-nickel coins were used, 1919-1921 and 1919-1920, respectively.
In a poor country very small coins are important. The 1/4 Anna would correspond to the smallest British coin in ordinary circulation (until 1956), the farthing (1/4d). The 1/2 Pice and 1/12 Anna would be worth only a half and a third of a farthing, respectively. As it happens, such values existed in British coinage. Half and even quarter farthing coins were minted for use in Celyon (with the halves made current in Britain itself in 1842), and third farthings were minted for many years for use in Malta. In American values, however, these are very tiny coins. A farthing itself was only 1/2 US cent on Gold Standard values, and the United States stopped bothering with half-cent coins after 1857. This gives a pretty good clue how much higher prices, and wages, were in the United States compared to most of the rest of the world.
A curious thing about the system of coinage is its purely binary character from the half-Pice up to the Rupee -- which is 128, or 27, half-Pice. If the Pice were 4 Pies instead of 3, the system would go up to 16 Annas in the Rupee and down to 1/16 in the Pie. This may not be a coincidence. Evidence from the Indus Valley Civilization is that weights were used in increments of 2, up to 16 -- which implies a hexadecimal (base 16) number system. While the decimal counting of most world civilizations did involve a factor of 2, a purely binary system is unique, like the equally extraordinary sexagesimal (base 60) counting of Babylonia. Since there are no Indus documents surviving that would have the kind of counting that we see in Sumerian and Babylonian tax records, bills of lading, harvest totals, and mathematics problems, we do not know if the actual Indian number system was binary or hexadecimal in the same way. Nevertheless, the Rupee does seem to reflect something every old in India.
British Coins before the Florin, Compared to French Coins of the Ancien Régime
Philosophy of History
In 498 the Emperor Anastasius reformed Roman coinage, mainly by restoring a rational system of copper coins. At that point, there was only one small copper coin, the nummus, of uncertain relation to the existing gold and silver coins. However, J.B. Bury flatly says that the copper follis was "equivalent to forty sesterces" [History of the Later Roman Empire, Volume I, Dover, 1958, pp.446-447].
|12 miliarensia||5760 sestertii|
|semisses||6 miliarensia||2880 sestertii|
|tremissis||4 miliaresia||1920 sestertii|
|miliarension||2 keratia||480 sestertii|
|keration, siliqua||6 follera||240 sestertii|
|follis, M||2 oboloi||40 sestertii|
|obolos, K||2 dekanumia||20 sestertii|
|dekanumion, I||2 pentanumia||10 sestertii|
|pentanumion, E||5 nummi||5 sestertii|
|denarius||16 asses||4 sestertii|
|sestertius, nummus||4 asses|
|quadrans, kodrantes||1/4 as|
Both Latin and Greek terms tend to be used for the Anastasian coinage. Nomisma is Greek, and nummus is Latin, both actually meaning just "coin" or "coin of the realm." Nummus had been used to mean the sestertius, which may be the origin of Bury's identification. But where nummus came to be used for the smallest pre-Anastasian copper coin, nomisma meant the flagship gold coin, which tended to be called a solidus in Latin, which itself was a nickname, a word that still exists in English, without the case ending, with pretty much the same meaning. If there was a formal name for the solidus it would be just what the standard gold coin had almost always been called, an aureus, i.e. "gold."
The solidus has been called the "dollar of the Middle Ages." Introduced by Constantine I around 310, the coin retained it full weight and fineness down to the reign of Emperor Michael IV (1034-1041). It then became so debased that the Emperor Alexius I introduced a new gold coin in 1092, the hyperpyron. The solidus was minted at 72 to the Roman pound (at about 5143 grains). On the old Gold Standard Pound Sterling, this makes the coin worth 12 shillings 73/4 pence; or, on the Gold Standard US dollar, $3.08. In 1995 dollars, this would be $55.58. In 2011, however, with gold up to around $1700 an ounce, the solidus would then be worth $255. The solidus and its divisions were still minted quite late in the West even by the Lombards, but the collapse of a cash economy in Western Europe mean that gold coins were eventually abandoned, and Charlemagne only minted silver. Circulating gold coins did not return to the West until Florence minted florins in 1252 and the Venetians ducats in 1284.
The copper coinage of Anastasius, which is the principal innovation, is all clearly marked with its value in the form of Greek letters: "M" for 40, "K" for 20, "I" for 10, and "E" for 5. Unlike Roman numerals, all Greek letters have a numerical value. In the silver coinage, we have another case of parallel Greek -- keration -- and Latin -- siliqua -- terms again.
The original Roman coin was the copper as, which had first meant a pound of copper but later was, of course, much reduced. The pronuncation of this, and its plural (asses), poses a slight dilemma in English, where it might sound like a certain humble body part. But the word actually does still exist in English, and has its own pronuncation, as "ace," which we might continue using.
The coinage of Augustus contains two each of gold, silver, and copper coins, but also three of a yellow alloy of copper (orichalcum), which is actually used for the sestertius itself. Of the divisions of the as, one survived in the Augustan coinage, the quarter as, the quadrans, which also has a Greek pronuncation, kodrántês. This is the coin that is translated "farthing" in the King James Bible, when Jesus says:
(Matthew 5:26) Verily I say unto thee, Thou shalt by no means come out thence, till thou hast paid the uttermost farthing.
The denarius was the classic silver coin of the early Empire, and although the name refers to a value of 10 asses, this had been upped to 16. Similarly, the sestertius, whose name implies a value of 2.5 asses, was upped in value to 4.
The solidus ceased to exist as a coin in the West, but it continued to be used as a unit of value, or of account -- the sol or sou in French, and the "shilling" in English. Eventually it was revived as a silver coin, as the penny itself eventually was minted in copper (and then bronze). Originally, there were supposed to be 240 English pennies minted from a pound of Sterling (.925) silver. Thus, the "pound" (Latin libra, French livre) itself came to be a unit of account, and was in time minted in the form of gold coins, finally as the British sovereign.
The modern British 5p coin, which is the decimal descendant of the shilling, thus may be said to be the last link to Roman coinage, although, as the solidus, it only existed on paper for the many centuries of the silver penny. The French 5 centimes was long called the sou, a term that will still be found in much French literature. Under the Fourth Republic, however, French money became "new" Francs, at 100 "old" Francs to 1 "new" Franc, so the direct link to the old solidus was really lost. Now, all this is gone, as France has abandoned the Franc and converted to Euros, the money of the European Union.
Political Economy, Economics
Philosophy of History