Around a.d. 755 the Carolingian Reform established the European monetary system, which can be expressed as:
1 pound = 20 shillings = 240 pennies
Originally the pound was a weight of silver rather than a coin, and from a pound of pure silver 240 pennies were struck. The Carolingian Reform restored the silver content of a penny that was already in circulation and was the direct descendant of the Roman denarius. The shilling was a reference to the solidi, the money of account that prevailed in Europe before the Carolingian Reform. The solidi money of account originated from the Byzantine gold coin that was the foundation of the international monetary system for more than 500 years. The shilling acted to bridge the new monetary system to the old, an important role because debts contracted prior to the Reform were defined in solidi.
For three centuries following the reform, the only coin minted in Europe was the silver penny. Shillings and pounds were ghost monies—convenient shorthand for keeping accounts, but not actual coins. Rather than writing down 2,400 pennies, it was easier to write or say 10 pounds, and rather than write or say 12 pennies it was easier to write or say 1 shilling. The silver penny was the linchpin of the Carolingian system, but major transactions required unwieldy numbers of pennies, counting into the tens or even hundreds of thousands, and the pound and shilling were handy measures of pennies.
The Carolingian Reform was the work of Pepin the Short (r. 751–768), the first king of the Carolingian dynasty and father of Charlemagne. In addition to establishing the Carolingian monetary system, the Reform also reduced the number of mints, strengthened royal authority over the mints, and provided for uniform design of coins. All coins bore the ruler’s name, initial, or title, signifying royal sanction of the quality of the coins.
Charlemagne spread the Carolingian system throughout Western Europe. The Italian lira and the French livre were derived from the Latin word for pound. Until the French Revolution, the unit of account in France was the livre, which equaled 20 sols or sous, which in turn equaled 12 deniers. During the Revolution the franc replaced the livre, and Napoleon’s conquest spread the franc to Switzerland and Belgium. The Italian unit of account has remained the lira, and in Britain the pound-shilling-penny relationship survived until 1971.
Even in England the pennies were eventually debased, leaving 240 pennies representing substantially less than a pound of silver and the concept of a pound as a money unit of account became divorced from a pound-weight of silver.
After the breakup of the Carolingian Empire pennies debased much faster, particularly in Mediterranean Europe, and in 1172 Genoa began minting a silver coin equal to four pennies. Rome, Florence, and Venice followed with coins of denominations greater than a penny, and late in the twelfth century Venice minted a silver coin equal to 24 pennies. By the mid-thirteenth century Florence and Genoa were minting gold coins, effectively ending the reign of the silver penny (denier, denarius) as the only circulating coin in Europe.
