England's Monetary Systems in the Early 1900s
Money in England in the early 1900s used a pre-decimal system that originated in France and may have been in use in England as early as the seventh century. The basic unit of this system was the pound, divisible into 20 shillings, with 12 pence to each shilling or 240 pence to the pound. British currency was (and is) known as "sterling," probably from a Middle English word meaning strong, rigid or fixed.
1 English Financial System and The Gold Standard
England's financial stability was based on the gold standard, where currency notes were only issued if the country held corresponding amounts of gold in reserve. The gold standard was used internationally and faith in this system was based on financiers' trust in the stability of British currency, often used as the international reserve currency held by banks. Before the start of World War I, Britain was the world's largest foreign investor and London was the world's financial center. Britain abandoned the gold standard during World War I, re-established it in 1925, and abandoned it again in 1931 during the Great Depression.
2 British Coinage Used in the Early 1900s
Besides pounds, shillings and pence, British coin denominations in the early 1900s included the threepenny piece, the sixpence or tanner, the florin (two shillings) and the half-crown (two shillings sixpence). The monarchy also issued specially-minted coins each Easter as part of the Maundy ceremonies.
3 British Currency Notes in the Early 1900s
British banknotes were issued by the Bank of England on behalf of the government from 1694 onwards. Denominations in circulation in the early 1900s included notes of 1, 2, 5, 15, 25, 40, 60, 100, 500 and 1,000 pounds (see Resource 3). A 10-shilling note was first issued in 1914. From 1717 British upper classes often paid in "guineas," which consisted of one pound and one shilling, or 21 shillings; this tradition persisted in the early 1900s, although there was no guinea coin or note in circulation by that time.
4 The First World War and British Currency
The start of World War I in 1914 marked the onset of Britain's abandonment of the gold standard, which had pegged currencies in circulation to values of gold held in reserve. Regular shipments of gold from Britain to the United States up until April 1917 maintained the value and reputation of the pound sterling, in exchange for desperately needed commodity imports. In 1916 Britain pegged the value of the pound at 4.76 U.S. dollars. After the war Britain made unsuccessful attempts to return to the gold standard, but financial markets fluctuated and the British pound's position as the key world currency did not resume.
- 1 The Royal Mint Museum: Pounds, Shillings and Pence
- 2 The Royal Mint Museum: Elizabeth I Fine Sovereign
- 3 The Royal Mint Museum: Isaac Newton
- 4 Fraser Federal Reserve Archive: International Gold Standard and U.S. Monetary Policy From World War I to the New Deal
- 5 The Royal Mint Museum: Old Denominations
- 6 Public Broadcasting Service: Commanding Heights, United Kingdom
- 7 The Royal Mint Museum: Half-crown
- 8 The Royal Mint Museum: Florin
- 9 Royal Mint Museum: Shilling
- 10 Royal Mint Museum: Sixpence