The Liverpool Act of 1816 officially put England on the gold standard and provided for a subsidiary silver coinage to complement the gold coinage and bank notes that dominated England’s money supply. It gave silver a role to play in a monetary system in which the monetary standard was defined in terms of gold.
During the eighteenth century England was technically on a bimetallic standard, but the market price of silver stood above the mint price for most of that era, and consequently no silver was brought to the mint for coinage. England had in practice settled into a gold standard and silver coins were in short supply. After 1785 the market price of silver tumbled, and silver flowed to the mint in large amounts for coinage, threatening to upset an unofficial gold standard that met with the approval of the English government. Parliament hastily enacted legislation that prohibited the mint from purchasing silver for coinage, circumventing the possibility that silver would oust gold as the predominant monetary metal. By 1797 the financial stringencies of war with Revolutionary France had forced England onto an inconvertible paper standard that lasted until 1821, encompassing the period of the Napoleonic Wars. As pressure mounted for a return to the gold standard, a complementary movement gathered strength to reform the silver coinage.
As early as 1798 the government had appointed the Committee of the Privy Council on the State of the Coinage, but the committee failed to reach quick agreement and chose not to make recommendations until the war ended. In 1816 the committee made its report, recommending the coinage of both gold and silver, but also recommending that the monetary standard be defined in terms of gold only, thus officially ratifying a century-old gold standard. The committee’s recommendations left the weight and denominations of gold coins unchanged.
The committee recommended a return to silver coins, but only as a subsidiary coinage. Silver coins were to be regarded as representative coins, legal tender for payments of no more than 40 shillings. The committee recommended that the mint purchase silver for 62 shillings per pound, but coin the silver at a rate of 66 shillings per pound. That is, the face value of the silver coins struck from a pound of silver was equal to 66 shillings. The committee hoped that the slight increase in face value per unit of silver weight would make the melting down and export of silver coins unprofitable. Also, the remaining silver content, which was still significant, would discourage counterfeiters.
The government adopted the committee’s recommendations without delay in the Liverpool Act of 1816. This act made silver coins an important component of England’s money supply until 1947, when England removed all precious metal content from its “silver” coinage. Beginning in 1947 England’s “silver” coinage has been composed of cupro-nickel alloy, a copper and nickel alloy.
