Monday, May 07, 2012

In for a penny, in for a pound

It seems that the British pound was originally based on a pound weight of silver, equivalent to 240 silver pennies (or "sterlings"). I remember the old pre-decimal penny (which was 12 to the shilling, and 20 shillings made a pound) - though it had long since ceased to be made of silver.

Currently, 99.9% pure silver is being bought at £0.53 per gram. A pound weight of silver (454 grams) would therefore fetch £240.62.

So an old silver penny is worth a new British pound.

An 11th century (Edward the Confessor) penny

But the increased efficiency of modern production and distribution has made things cheaper today:

- Petrol (currently c. £1.40 per litre) would, in silver terms, cost 6d/gallon - a third cheaper than in 1896! And that's despite the fact that, these days, 60% of the pump price of petrol is taxes.
- Artisan bread from Asda (currently 78p for 400g), equates to £1.13 for a full pound weight (454g) - a little over one silver penny. Whereas in the year 1758, the old best quality (white) "penny loaf" got you only 6 ounces 2 drams weight, or 174 grams; so a pound weight of the same would now cost 2.6 silver pennies - more than twice as much pro rata as that Asda loaf.
So we've had inflation, but also a drop in prices.

1 comment:

James Higham said...

Silver's the way to go then? But it's also manipulated.