Term Paper: British Pound From 1965-2000

Pages: 8 (3137 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] Even though it complies of the same diameter, it is thinner and lighter, weighing only 12.0 grams, and this appears to have contributed to its popularity. It now seems set to become a common sight in our change after only just over half a century!

Near the end of he twentieth century rumor was being shifted around about a two pound coin with the queen wearing a necklet which was valued at £15. However, this remains just that, a rumor, lacking in truth. There is no truth in this rumour. It is the sort of story which appears to start for no particular reason, and then self-perpetuates in a form a "Chinese whispers," so that it becomes a source of misinformation to all those who over hear it.

This rumour is in connection with the 1997 new bi-metallic two pounds coin. The nearest anyone can come to solving the "mystery of the queen's necklet" is that a listener phoned a Red Rose Radio / Rock FM phone-in show, and said that he had heard, from where or whom, no one knows, that a two pound coin showing the queen wearing a necklet was worth £15. That afternoon about four telephone calls were received. Each of the callers were asking the same questions; was this rumor true? They were able to quickly ascertain that there was no known rarity or error. All two-pound coins from 1986 to 1997 bear the queen's third portrait in which she is shown wearing what appears to be a pearl necklet, from 1998 the obverse (head side) design changed to a more mature fourth portrait. In this portrait, Her Majesty is shown truncated at the neck rather than the shoulder. She therefore appears without a necklet. Originally it was perceived that within a few weeks of the radio programme, this particular rumour would die a natural death, but unfortunately it appears to have started to replicate itself, and numerous telephone calls and e-mails are still being received about it. As the time passes on with this rumor, the "value" jumps around, and although £15 is the commonest figure we hear, sometimes it changes to £5, £17, and other figures.

A few weeks after the programme, a visitor appeared and asked about the story, and he was told of the facts, he was better able to inform others of the untruthfulness in the rumor. He claimed to know somebody who had sold one for £15 plus the £2 face value. Therein, a deal was made to find hundreds of them, and that if he could point the buyer out, the profits would be split between the two. Apparently it was someone he was talking to in a pub who had sold it to a dealer in Birkenhead. So far he has not been back to claim his share of the potential profits.

Different Designs

So far all of the base metal two-pound coins have featured a different design in each year of issue, sometimes two different designs in the same year. Here are a few the designs so far:-

Nickel brass issue-86-95

Reverse of 1996 2 pound

1999 bi-metallic base metal (reverse)

Due to the fact that so far every issue has carried a different design, and ten different designs in eight different years, all the above coins have been struck in special collectors editions, in addition to the ordinary base metal circulation issue. These special editions include uncirculated specimens in folder, 50% silver, base metal proofs, silver proofs, gold proofs and piedfort silver proofs. For coin collectors, this arouses amusement, and may add to their fun, however, it can easily get confusing.

The pound Sterling has a very different history from continental currencies. Other European countries have more experience with currency unions, e.g. The Latin Monetary Union of 1861-1920, the Scandinavian Monetary Union, which lasted until 1924, and the Zollverein of 1834, which led to political union between the German states. Furthermore the history of the pound sterling goes back 1,300 years whereas most European currencies date back only to the end of the Second World War since that conflict led to the destruction and reform of their previous currencies. Consequently a change of currency would arouse more suspicion in Britain than on the Continent

The Long History of the Pound Sterling

Although France had a single national currency for a short period of time during the reigns of Pepin and Charlemagne, England has enjoyed a relatively stable single national currency with an unbroken history of over 900 years, and the origins of the pound Sterling go back even further still.

The need to pay Danegeld, or to pay for defence, and the Viking invasions caused an enormous increase in the production of coins in England. Athelstan had no fewer than 30 mints in operation and in order to keep control of them all the Statute of Greatley was passed in 928, initializing that there was to be only one single type of money or currency in England, and ever since there has been just one. This was many centuries before the history of the currencies now used in other major European countries started.

England became the first of the major countries of Europe to attain a single national currency in post-Roman times. However the renewed incursions of the Danes postponed the uninterrupted establishment of this principle until 1066. Even so the achievement of a uniform national currency in England preceded that of France by more than 600 years, and of Germany and Italy by nearly 900 years: a factor perhaps in Britain's instinctive reluctance to embrace a single European currency today." (Davies, Glyn. A history of money)

The author also explains on page 444:

Most European countries, large or small, have repeatedly had to carry out changes which have drastically altered their internal currencies... However, the pound as a unit of account has never had to be replaced by a 'new pound' or any other designation in 1,300 years, in contrast to the French franc or the various German currencies such as the Reichsmark, Rentenmark, Ostmark and Deutschemark, to mention merely some of the more modern changes."

The Pound Sterling as an International Currency second basic difference between sterling and continental currencies springs from the fact that the pound had been paramount in international trade for two hundred years but remained (except for Scandinavia and Portugal) relatively unimportant in intra-European trade."(Davies, Glyn. A history of money) In this statement, it is shown that even though the pound had been in circulation for so long, it still was not being used very much among the merchants.

Throughout the long era of sterling supremacy it was the other countries that had in the main to adapt their currency arrangements to fit in with sterling. From 1945 to 1972 Britain, like other countries, had to fit its currency to the exigencies of the dollar. From the time that Britain belatedly entered the EEC on 1 January 1973 she too had to undergo the difficult transition involved in adapting sterling to the currency arrangements of her EEC partners, a change in attitude greater than that required from these other participants." (Davies, Glyn. A history of money)

Destruction and Reform of European Currencies

The destruction and the reform of European countries is explained very well in A History of Money, by Glyn

Davies. In this book, he states, "During and immediately after... [the Second World War] almost every country on the European continent experienced the destruction and reform of their currencies. Germany reformed her currency in 1948 (on which her subsequent success was based) after having suffered two hyperinflations in a generation. The former German-occupied countries, from France to Norway, got rid of their wartime inflation by means of overnight currency reforms whereby their grossly inflated wartime currencies were reduced by up to a hundredfold or more, thus not only providing the basis for a sound new currency but also penalizing collaborators, profiteers, tax-evaders and similar unworthy holders of swollen money balances. At the same time, it provided the grandest and most perfect example of the effectiveness of the quantity theory of money administered at a stroke and, most unusually, in a price reducing manner. Thus in glaring contrast to the British, most continental families or their parents have personally experienced drastic currency reform, followed by unprecedented growth in their living standards. For them EMU was just another logical step, not the leap in the dark it seemed to a considerable section of British opinion, especially among the older more influential generation."

Longer-Term Changes in Currencies

Due to Britain's head start in the Industrial Revolution, developments in banking, her victory over her most powerful rival in the Napoleonic Wars, and the spread of the British Empire during the 19th century, the pound sterling became the world's most important currency. Following Britain, other countries belatedly took upon the action of carrying out the British example of basing their currency on gold, instead… [END OF PREVIEW]

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