From Ha’pennies to a Farthing: Britain’s Pound Hits Historic Low

At primary school we chanted: “Two ha’pennies make a penny, 12 pennies make a shilling, 20 shillings make a pound.”

Generous aunts gave me half crowns. These were chunky silver coins worth two shillings and sixpence. They had a coat of arms on the reverse and would buy a mountain of sweets at Mr Keefe’s shop. Crowns were only minted for jubilees, but the half-crown enjoyed regular circulation. Pre-1920 ones were sterling silver – 92.5% pure – and those from 1920 to 1946 were 50% silver. As were the shilling, sixpence and the florin (two shillings). The modern 10p, successor to the florin, is half the size and is made of cheap steel, as you can test with a magnet. It’s coated with cupro-nickel so that it doesn’t go rusty.

Our coinage, I learnt, was based on Charlemagne’s magic number: 240 pennies to a pound. It’s magic because it’s divisible by so many other numbers – 1, 2, 3, 4, 5, 6, 8, 10, 12, 15, 16, 20, 24, 30, 40, 60, 80, 120 – as well as itself. One hundred, the basis of the decimal system, is less versatile, being exactly divisible only by 1, 2, 5, 10, 20, 25, 50 and itself. Hundreds and decimals better serve accountants. But, if you’re splitting loot among your war band, you can’t beat 120, 240, 480 and 960. You don’t need to keep chopping pennies into thirds.

There were ways to handle calculations with pounds, shillings and pence too. My father taught me, having lost patience with my primary school. I was nine or 10 at the time and decimalisation was still a few years away.

“You buy 1500 shares at ten shillings and sixpence,” he’d spring on me after dinner, looking over the broadsheet Daily Express. “How much is that?” 

“Er… 15,000 shillings… plus 1,500 sixpences, which are half a shilling, so that’s another 750 shillings… That’s 15,750 shillings… Now divide by 20 which is… um…” I’d blank, attempting long division in my head. Which you can’t do.

“What have I told you, David? Break the sum up. Ten bob (shillings) is half a quid. Fifteen hundred 10 bobs are £750. Yes? Then sixpence is 5% of 10 bob, so we add 5%. Ten percent would be £75, but it’s half that – £37 10s. Add £37 10s to £750 and you’re there – £787 10 shillings.”

“Now the broker charges you 2%. So how much is that?”

“If it was £800, it’d be £16 – £2 for every hundred, but the last hundred is an eighth short. So, that’s five bob less – £15 15 shillings.”

“Better. There’s 1% tax. How much is that?”

“Half of £15 15s. But it’s easier to halve £16 and subtract half a crown – so £7 17 shillings and sixpence.”

By the time I went to grammar school, I was as quick as he was. I forgot the logarithms and trigonometry that the grammar school taught me, along with the Latin. But the Old Man’s mental arithmetic remains.

His own father had grown to manhood before the Kaiser’s war, when you could enter a bank with a five pound note – there were no one pound notes until 1914 – and come out with five shiny sovereigns. Gold coins were routine. The penny was divisible too and would remain so until after Hitler’s War. Not only were there two ha’pennies to a penny, but also four farthings, meaning 960 to the pound.

And here is the point of this article. For a few days in January and now, more continuously, is has cost over £960 to buy a gold sovereign. In other words, the relationship of the ‘Pound in your Pocket’ to that old gold pound is now the relationship of the farthing to the sovereign in 1914: 960 to 1.

In terms of purchasing power, it’s not quite so bad. If you are buying goods, the Pound in your Pocket is still worth around tuppence ha’penny (i.e., 1p) according to the Bank of England. You might think that means that gold is ten-fold over-priced (1p = almost 10 farthings), but that’s debatable. House prices are now around 1000-fold higher than 1914, more or less matching the pound’s decline to a farthing. Admittedly, you do now get an inside toilet.  

What’s more, logic says that, if the supply of goods becomes more efficient whilst the gold supply is constant, or grows more slowly, then the price of goods in sovereigns should fall. Those were the conditions of the long 19th Century, from the end of Napoleon’s War (1815) to the start of the Kaiser’s (1914). Industrialisation made goods cheaper to produce. The steamship and the railway made them cheaper to transport. And – most vitally – innovation flourished.

Fiat to gold convertibility had been suspended during the French Wars and prices roughly doubled from 1790 to 1815. They then began to fall from 1816, when the first sovereigns were minted – replacing the pre-War guinea (21 shillings). In 1821, full convertibility was restored. By then consumer prices were around 11.5% of those that would prevail in 1974, when the modern price index was constructed. Across the subsequent 94 years to 1914, there were 48 years where prices rose and 46 where they fell. But the falls were, on average, bigger. On the eve of the 20th Century’s seminal disaster, in 1914, the index stood at 9.6, almost 20% lower than in 1820.

This downward drift was despite large – and potentially inflationary – increases in the supply of gold, from finds in California (1849), Australia (1850s), South Africa (1884) and the Yukon (1898). And, for anyone who asserts a deflationary gold standard stifles the economy – consider the progress of the 19th Century… What a gold standard does stifle is the ability of politicians to print and squander money.

Since the Kaiser’s War it has all been downhill. Unlike in 1821, the 1925 attempt to restore the Gold Standard was a failure, abandoned in 1931. On the eve of Hitler’s War, in 1939, a sovereign cost £2/2/10 (£2.14), meaning that the Pound in your Pocket stood at a little over nine shillings. Under the Bretton Woods system, which prevailed from 1945 to 1971, gold was set at $35 per ounce and the pound was progressively devalued from $4.00 to 2.40. Consequently, relative to a sovereign, containing just under a quarter ounce of gold, the Pound in your Pocket apparently declined from nine bob to five and sixpence. In truth it was worse. Exchange controls meant that the market was artificial. You needed a licence to own more than four gold coins.

Nixon’s abandonment of Bretton Woods ended this era and currencies began to float. By 1973 a sovereign cost over £8, meaning that the Pound in your Pocket was worth what half a crown had been worth in 1914. It went below the florin (two shillings) in the same year; under one shilling in 1977; and under sixpence in 1979, when the incoming Thatcher Government repealed the Exchange Control Act. From 2000 until the late Noughties – with Gordon Brown busily selling off gold reserves then promoting quantitative easing to save the world – the Pound in your Pocket hovered around three to five old pence, enjoying a period of heavily devalued stability.

It then resumed its slide.  

By 2019 the Pound in Your Pocket was consistently worth less than one old penny, with a sovereign costing over £240. The ha’penny barrier fell in 2024 and now the farthing. No lower value coin was ever in regular circulation in England.

David Livermore is a retired Professor of Medical Microbiology at the University of East Anglia.