What would a gold sovereign have got you in 1909?

[watchesandwhisky]

Wow nearly a decade old post! is this forum ten yet?

[Bratnia]

On 07/11/2014 at 19:40, crazy hippo said:

so how much would a sovereign have cost? Was it currency or was it always a bullion coin?

Was still currency/circulating up to WW1 (1914) when controls were then applied (to keep gold within the country). Gold was pretty much fixed at £4.25/ounce from 1719 up to 1930. A fixed/constant rate was more consistent for international trade so the British Pound became a common international trade settlement currency, somewhat like how the US dollar is today. Gold being finite however meant that inflation broadly averaged 0%, but at times saw clustered volatility (spike in inflation followed by a equal measure of deflation).

i.e. a Sovereign contains 0.2354 troy ounces and 1 / 0.2354 = £4.25. Gold/Silver ratio was around 38 in 1910, so a ounce of silver cost around £0.11.

20 silver Shillings to one Pound (Sovereign). Each Shilling being 0.925 silver (rest was copper) back then.

12 copper Pennies to one Shilling

Prices were stated such as one pound two and six, meaning one pound, two shillings and six pence.

I believe the 12 pennies per shilling was preferred for the divisibility. Can be split 1 x 12, 2 x 6, 3 x 4, 4 x 3, 6 x 2 ... (five) equal ways. Hence 12 Pennies per Shilling, or a dozen eggs ...etc. Decimal in contrast just has 1 x 10, 2 x 5, 5 x 2 (three equal ways).

The original Pound dates back to the mid 700's, when a Pound was a Saxon pound weight of silver. i.e. the Pound is one of the oldest currencies.

In 1931 the market price of gold rose above 4.25/ounce, so people started exporting gold in a large-scale manner as the metallic value was worth more than the currency value. The country was running out of gold so the gold-standard was ended. Then along came WW2, and after that the US dollar stepped up to become the primary trading/reserve currency, but a fiat based system (unlike gold that cannot be conjured out of thin air, dollar printing presses can 'create' new money, that benefits the printer, devalues all other notes in circulation so you get inflation and a broad tendency for the dollar to decline relative to gold). All fiat currencies decline sooner or later, repeatedly so and over enough time and the price of gold relatively rises in that currency. Really its less a case of the price of gold rising, more a case of the currency value declining, being deflated, and where the higher prices due to that is called inflation.

[Silverlocks]

38 minutes ago, Bratnia said:

I believe the 12 pennies per shilling was preferred for the divisibility. Can be split 1 x 12, 2 x 6, 3 x 4, 4 x 3, 6 x 2 ... (five) equal ways. Hence 12 Pennies per Shilling, or a dozen eggs ...etc. Decimal in contrast just has 1 x 10, 2 x 5, 5 x 2 (three equal ways).

240 pence in a pound is actually a very good number for divisibility as it can be broken up in 2, 3, 4, 5, 6, 8, 10, 12, 15, 16, 20, 24, 30, 40, 48, 60, 80 or 120 ways.  It was done that way for good reasons.

Then they introduced the guinea, valued at 21 shillings and sixpence.  Science is powerless to explain why anybody thought that was a good idea.

[SidS]

4 hours ago, Silverlocks said:

Then they introduced the guinea, valued at 21 shillings and sixpence.  Science is powerless to explain why anybody thought that was a good idea.

The Guinea was pegged at 21 shillings, it SHOULD have been pegged at 21s 6d.

In the late 1600s/early 1700s silver had increased in value on the continent. The government failed to reduce the weight of English silver coinage as it would be detrimental to the 'quality' brand that it had acquired. Best purity, best weight etc. So European merchants arrived in Britain laiden with gold and exchanged it for the over weight silver coins England made and exported them abroad to be melted down at a profit. British gold coinage however wasn't fixed to the silver and although each Guinea was nominally valued at 20 shillings, they in fact floated in value and were obtained at anywhere between 25 to 30 shillings by the late 1690s.

What Britain should have done is reduce the weight of their silver coins, but they wouldn't do it. So bad money (in this case very common gold) drove out the shorter supply silver.

Isaac Newton stepped in by 1717 and fixed the guineas at 21 shillings, but in actuality they were really worth 21 shillings and sixpence in silver money. But that extra sixpence would make adding/subtracting and dividing a nightmare. So they hoped the extra sixpence out of whack wouldn't make much difference. Unfortunately it did, as the overvalued guineas weren't actually the problem. It was Britain's undervalued silver coinage that continued to be exported en mass to Europe where more lighter weight coins were made. Crown sized coins are prolific in Spain and France in the 1760-1790s era, in Britain we had nothing left. They finally sorted it all out in 1816 when they reduced the weight of the silver coins and rounded the gold coins down to 20 shillings by taking a shilling worth of gold from them.

So the whole weird 21 shilling thing was a typically totally bizarre and insane response that Britain seems to pride itself on. Make something extra awkward to avoid taking the simple solution to a problem.

Edited July 30, 2023 by SidS

[SidS]

In the late 18th century, France and Spain were knocking these things out in their millions, whilst Britain was only manufacturing gold coins in any quantity.

Crown-sized 8 reales and Ecus:

 

[Bratnia]

On 30/07/2023 at 12:43, SidS said:

The Guinea was pegged at 21 shillings, it SHOULD have been pegged at 21s 6d.

In the late 1600s/early 1700s silver had increased in value on the continent. The government failed to reduce the weight of English silver coinage as it would be detrimental to the 'quality' brand that it had acquired. Best purity, best weight etc. So European merchants arrived in Britain laiden with gold and exchanged it for the over weight silver coins England made and exported them abroad to be melted down at a profit. British gold coinage however wasn't fixed to the silver and although each Guinea was nominally valued at 20 shillings, they in fact floated in value and were obtained at anywhere between 25 to 30 shillings by the late 1690s.

What Britain should have done is reduce the weight of their silver coins, but they wouldn't do it. So bad money (in this case very common gold) drove out the shorter supply silver.

Isaac Newton stepped in by 1717 and fixed the guineas at 21 shillings, but in actuality they were really worth 21 shillings and sixpence in silver money. But that extra sixpence would make adding/subtracting and dividing a nightmare. So they hoped the extra sixpence out of whack wouldn't make much difference. Unfortunately it did, as the overvalued guineas weren't actually the problem. It was Britain's undervalued silver coinage that continued to be exported en mass to Europe where more lighter weight coins were made. Crown sized coins are prolific in Spain and France in the 1760-1790s era, in Britain we had nothing left. They finally sorted it all out in 1816 when they reduced the weight of the silver coins and rounded the gold coins down to 20 shillings by taking a shilling worth of gold from them.

So the whole weird 21 shilling thing was a typically totally bizarre and insane response that Britain seems to pride itself on. Make something extra awkward to avoid taking the simple solution to a problem.

I believe America went the other way and a silver dollar coins silver content value was less than a dollar, a safety margin.

[Bratnia]

On 30/07/2023 at 07:52, Silverlocks said:

240 pence in a pound is actually a very good number for divisibility as it can be broken up in 2, 3, 4, 5, 6, 8, 10, 12, 15, 16, 20, 24, 30, 40, 48, 60, 80 or 120 ways.  It was done that way for good reasons.

Then they introduced the guinea, valued at 21 shillings and sixpence.  Science is powerless to explain why anybody thought that was a good idea.

As late as the 1960's there was tradition at the Bar that a Pound (20 shillings) went to the barrister and the rest went to the clerk. Guinea's were also commonly associated with other areas of gentry, horse racing ...etc. loose change for the underlings, or plebs as Parliament still call us today.