The decimal system, a number system based upon the number 10, became a distinguishing characteristic of currency systems during the nineteenth and twentieth centuries. The currency system of the United States offers a typical example of a decimal currency system, with one dime equal to one-tenth of a dollar, and one cent equal to one-tenth of a dime, or one-one-hundredth of a dollar.
From the ninth century until the end of the eighteenth century the Carolingian currency system held sway in Europe. Under the eighth-century Carolingian reform, instituted by Charlemagne’s father, King Pepin, 12 pence equalled 1 shilling, and 20 shillings made 1 pound.
The Carolingian reform established a new silver coinage in which 240 denarii (pennies) equaled a livre, or pound weight of silver. The Norman Conquest brought the Carolingian system to England, where it survived until 1971.
The Russians deserve credit for giving the modern world the decimal system of currency. By 1535 the Russians were trading in a Novgorod ruble, and a smaller unit, the denga, equal to one-one-hundredth of a ruble. Under Peter the Great the denga became the kopek, but otherwise Russia’s decimal currency system has remained intact up to the present day.
The Russian decimal system met with a cold reception in the courts of Europe, which had elaborated upon the Carolingian system into currency systems susceptible to manipulation because of a multiplicity of coins that could be selectively debased. Also, the royal courts of Europe were not impressed with innovations from countries such as Russia, which were mired in economic backwardness.
The American revolutionaries, eager to depart from the practice of European monarchies, found no charm in coins called crowns and sovereigns, bearing portraits of British monarchs. The Spanish milled dollar was a popular coin in the American colonies, but the Spanish dollar was subdivided into eight reales. In 1782 Robert Morris, U.S. superintendent of finance, sent a report to the Congress of Confederation recommending that the states coin their own money as a substitute for the medley of foreign coins then circulating, and that the state coinage systems uniformly follow a decimal system. The reasons for preferring the decimal system were:
that it was desirable that money should be increased in the decimal Ratio, by that means all calculations of Interest, exchange, insurance and the like are rendered much more simple and accurate, and of course, more within the power of the mass of people. Whenever such things require much labor, time and reflection, the greater number, who do not know, are made the dupes of the lessor number who do.
Thomas Jefferson forwarded the idea that the hundredth part of the dollar be called a cent, after the Latin word for “one hundred,” and that the tenth of the dollar be called a dime, which means “tenth’ in Latin. Alexander Hamilton incorporated these ideas into his Report on the Establishment of a Mint, and the Coinage Act of 1792 called for the adoption of a decimal currency system in the United States. Because the Russian currency system made use of coins outside the decimal system, the United States can boast of the first completely decimal currency system.
The arguments favoring the decimal system impressed the revolutionary imagination of France, and on 7 October 1793 the French revolutionary government replaced the coinage system of the Bourbon dynasty with a decimal currency system. In 1795 the French revolutionary government changed the name of the livre to the franc, which equaled the sum of 100 centimes. The conquest of Napoleon helped launch the decimal system in Europe, where it spread rapidly during the nineteenth century. England held out until 1971, becoming one of the last countries to adopt a decimal currency system. A pound now equals 100 pence, instead of 240 pence.