During the nineteenth century, the British gold sovereign coin was the pride of the British Empire, the last coin to achieve significant international stature before the era of paper money superseded metallic coinage. Sir Charles Oman, an author on English coinage, praises the sovereign as “the best piece ever produced from the English mint.” J. H. Clapman, author of a well-known economic history of England in the late nineteenth century, wrote that the sovereign had become “the chief coin of the world.”
Lord Liverpool’s Coinage Act of 1816 had established gold as the sole standard measure of value for English coinage, and had provided for the coinage of a 20 shilling gold piece containing 123.3 grains of gold. Under the Carolingian system, which survived in Britain until 1971, one pound sterling equaled 20 shillings, which equaled 240 pence. The new coin was called the sovereign. Over a span of approximately 100 years the sovereign lived up to Lord Liverpool’s dictum that gold coins should be made as perfect and kept as perfect as possible.
The sovereigns were popular in foreign countries and many left England permanently. Sometimes fluctuations in exchange rates made it profitable to melt down sovereigns, and resell the gold bullion to the English mint, where it was recoined. One Treasury official, referring to the burden of keeping the world supplied with coins, observed that “although it is certainly no part of our duty to provide coins for foreign Governments, the facilities afforded to our commerce by the diffusion of a sound circulating medium throughout the world may justify a voluntary burden for that purpose” (Challis, 1992). Sovereigns were also struck in Sydney, Australia, and Bombay, India.
Britain continued to mint sovereigns until 1914, when gold coinage ceased to circulate domestically.
During the interwar period Britain returned to a gold bullion standard, but gold coins were not minted. During the post–World War II era sovereigns were minted intermittently and sold as a hedge against inflation, but not as circulating currency.
The famous historian Arnold Toynbee, in Volume 7 of his Study of History, cited evidence that famous coins, such as the Athenian owls, continued to circulate in out-of-the-way parts of the world long after the disappearance of the government that issued them. According to Toynbee, “it may be anticipated that the English gold ‘sovereign,’ of which Englishmen saw the last in a.d. 1914, might still be circulating in Albania for generations, and in Arabia for centuries after that portentous date” (Toynbee, 1954).
The British pound sterling was the preeminent international currency during the nineteenth and early twentieth centuries, comparable to the United States dollar in the post–World War II era. The pound sterling, however, was the last international currency, the prestige of which was dependent on a precious metal coin of unquestioned weight and purity.