How much English money does a pound sterling equal?

Answer 1

A pound sterling is one pound of British money, that is, the money of the United Kingdom (the correct title for the union of the three countries of England, Scotland and Wales). The origins of the term "sterling" are disputed, but it first meant "of good quality or value", and could be contrasted with "currency", meaning those coins in circulation, whether of good value or not.

Remember that British rulers, like those of other countries, have long tended to use precious metals such as silver and gold for the higher-value coins they produce, only using copper and its alloys, bronze and brass, (if at all) for lower-value coins such as farthings. The main problem with silver and gold is that they are very easily adulterated, by mixing with cheaper metals. Ever seen a character in a movie bite a coin? They're testing it's not made of lead (very soft).

Another problem with silver and gold coins is that, before mints began to especially mark the rim of the coin, eg by milling, enterprising thieves would clip small pieces of metal from the edges of the coin, melt them down, and sell them - or use them mixed with base (cheaper) metals to forge new coins.

So the end result of all this shady activity is that people didn't trust the coins in circulation. Kings and governments have gone to extraordinary lengths to instil public confidence in the coin of the realm, vigorously prosecuting criminals to prevent forgery or (unofficial) debasement of the coinage.

So sterling money was, essentially, money that could be trusted to be of full value, and would be accepted in payment by any merchant - or taxman. Whereas currency might be whatever coins, from wherever, the government could press into circulation.

That might be commonly-seen foreign coins, or even be tokens coined by traders to make up for a chronic shortage of small coin provided by the government.

The difference between sterling and currency became quite important in early Australian history. In New South Wales, Governor King made a Proclamation in 1800 legalising the use of various foreign coins and fixing their values. To make sure money didn't leave the colony, King gave the British or foreign coins he "borrowed" higher than face values - for example, Spanish reales (pieces of eight) were used in trade in Britain as "dollars" - coins worth five shillings, or a quarter of a pound. But King punched out the middle of these coins, marking the outer ring ("the holey dollar") as being worth five shillings and the "dump" as being worth 15 pence (a quarter of a dollar, since there were 12 pence to a shilling). Basically, King bought up these silver coins for 60 pence, then declared they were worth 75 pence - a tidy little profit!

When, in 1966, Australia finally switched to decimal currency, we finally did away with a system in which a "pound sterling" (ie a British pound) could only be exchanged at a fixed rate of one pound five shillings in Australian note and coin. The Australian pound was - by law - worth only 80% of the value of the British pound. It seems the colonial stigma of having to use "currency" instead of "sterling" quality money long outlived the independence of the Australian colonies from Britain.