The pound, known as the pound sterling or simply by its symbol, £, is the official currency of the United Kingdom. We know it because we use it every day for loans, buying things as well as seeing it grow in our savings accounts. Peachy is fascinated by currency and in this guide, you will learn the history of the currency that you use every day: the pound. The pound sterling is dated back as far as the year 760, according to Currency Information. The pound is known to be the oldest currency in the world.
How it all started
Currency Information noted that from 760 onwards till around 1158, pennies were made from the finest silver that the Crown could get, as opposed to the pennies that made from copper or metal today. The sterling pound, in terms of the word was introduced in 1158 because over 90% of it was made from silver itself. The first gold noble coin was introduced into Britain in 1344. The shilling was introduced in 1487, while a new version of the pound was revealed in 1489. As you can see the changes from the 760 to the 1489 shows how quick currency has evolved as the monarchy asserted itself as the leader of how currency should be used. Gold has always been an important part of British currency history as in this period; it was also used to finance whatever was needed in the country by the aristocracy and the gentry.
Paper currency itself appeared in the late 17th century. According to the Telegraph, King William III created the Bank of England so that he could go to war with France. The Bank of England is said to be the first central bank in history, but the fact King William III thought he could create his own bank to finance his wars shows that the pound has not only been the currency of the people, but it was a way for the monarch to live out his dreams.
When did paper printing happen?
Even though in the early 17th century that paper printing happened, paper currency was still handwritten around 1725, Note printing became more commonplace by the Bank of England in 1855. The Victorian Age, which heralded a lot of enterprise and many fortunes in Britain, meant that mainstream printing had to be a reality as currency requirements were increasing.
The rise & fall of the sterling
The Industrial Revolution heralded the rise of the sterling currency. Around 1717 is when gold superseded silver as the way to determine sterling’s value. The concept of the gold standard was the idea that every paper banknote that a country had needed to backed up with its equivalent in gold. This did many things for Britain – it definitely made the nation more stable and it encouraged people to trade with each other. The first World War made the gold standard unsustainable and it was suspended in 1914 by the government in order to focus on the war. In 1944, the Bretton Woods conference decided that every country in the world would have the US dollar as a reserve currency. In 1967, the government devalued the pound and this made it a difficult time for the country as wages were squeezed. Devaluation hurt the strength of the pound and it only made having the reserves of dollar more important.
The European Union question
Questions about 1 currency for the European Union swirled around for a long time in the 1970s. Even though most European Union countries opted for the Euro, the pound remained in the United Kingdom as the government opted to keep it in order to protect the British economy from changes in the EU. There is rampant speculation on whether the UK will keep the pound or not. The breakdown of the Greek economy and the pressure that the Spanish and Portuguese economies have felt has made it difficult for some people to justify joining the Euro. That said, the UK is said to be economically isolated from the EU because it has its own currency instead of having the Euro.
Today, tomorrow and the future
Besides the issue of the European Union, the biggest question that most people are asking is will Scotland stop using the pound if the country decides to leave the Union? The referendum is in September 2014 and it will decide whether to remain part of the UK or not. The referendum is due to happen on the 18 September 2014. The country has the option already to print its own banknotes and it does, but these are valued at the same strength as English banknotes in order to maintain stability. According to the BBC, the Scottish National Party has said that it doesn’t anticipate for the pound to end if the referendum goes through. As we look forward, the history of the pound has shown that even through peaks and lows, the pound has stayed the course. What we need to know is whether the future of the pound lies with the Euro or within our shores.
Fun facts about the pound
Here are a few fun facts that add some colour and texture to the pound’s long and illustrious history as the oldest currency in the world:
- The British pound was actually composed of shillings and pence up until decimalisation was introduced in the early 1970s. It’s hard to imagine using shillings and pence today, but as we know, pence survived but the shillings didn’t. (Source: BBC.com)
- Inflation has always affected the pound; the House of Commons estimated that that from 1750 to 1998, prices rose over 115 times. (Source: BBC.com)
- Queen Elizabeth I had the task of making the pound stable again in 1560 and she restored the coinage’s value as expected. (Source: BBC.com)
- The first sterlings were made from a pound of silver, which is where the pound stuck. (Source: Encyclopaedia Brittanica)
- £ stood for libra and this was a way to denote the pound. It comes from Latin and it has stuck as way to identify the pound. (Source: Encyclopaedia Brittanica)
The phrase ‘pound sterling’ is said to have originated from the idea that large payments were ‘pounds of sterling’. The name stayed the course and has come to mean the currency today when written or spoken formally. (Source: Encyclopaedia Brittanica)