Has the penny had its day?
In terms of the coins in your pocket, it’s useless.
National Consumer Council 1983 talking about the half penny coin
Like many of us over a number of years I had accumulated a bag full of Euro denominated coins so last week I took the opportunity of repatriating my bag full of Euro Cents by feeding a number of car park ticket machines along Germany’s Baltic Coast.
As I “fed” the machines with these small strange coins I wondered whether the UK’s “penny” might have also had its day. Just 13 years after 1971’s Decimalisation the National Consumer Council stated that the half (new) penny was “useless” – now some 52 years after Decimalisation do we need to ask whether the one, two, and perhaps even the five pence pieces have also had their day?
Let not its existence be imperilled
But, first a quote from The Times Letter Page in 1984:
Sir, Some may dispute the ’rounding-up’ or down, of the halfpenny coin, but let not its existence be imperilled. It is indispensable for levelling off pendulum clocks,
Priscilla Glover, The Times Letters Page.
A long and illustrious career
The world’s first true coins are widely believed to have been minted in Lydia in Asia Minor around 640BC. They were made of an alloy of gold and silver called electrum and were probably made in order to guarantee the purity of the constituent metal.
The next phase in the evolution of currency was the invention of paper money. The first banknotes were issued in China during the reign of Emperor Hien Tsung (AD806-821), but not as a result of any great financial insight. The sole reason for their introduction was an acute copper shortage that precluded the striking of new coins.
The first mention of sterling is in 1078 as “sterilensis”, and by the 13th century the term was in common usage. England had a uniform national currency 600 years before France, and 900 years before either Germany or Italy.
The pound was established in 1560 by Elizabeth I and its value was one Troy pound (373.2417216 grams) of sterling silver.
Tanners and bobs, ha’pennies and threepenny bits
Until decimalisation in 1971, a pound was made up of 20 shillings (each shilling was worth 12 (new) pence) and there were guineas, half crowns, threepenny bits, sixpences and florins. After decimalisation, the system was simplified, so that 100 “new pence” made up a pound.
This old system of currency, known as pounds, shillings and pence or lsd, dated back to Roman times when a pound of silver was divided into 240 pence, or denarius, which is where the ‘d’ in ‘lsd’ comes from. (lsd: librum, solidus, denarius).
Three years before changeover, new 5p and 10p coins were introduced; these were the same size and worth the same amount as the one and two shilling coins. In 1969 a new 50p coin was introduced to replace the old 10 bob (shilling) note.
Currency converters were available for everyone, and prices in the shops were shown in both currencies. This went some way to alleviate the feeling many people had, that shopkeepers might use the conversion from old money to new to increase prices!
In a stroke, the importance of the 12 times table reduced, the ease of adding up sums of money vastly improved overnight, the use of coins from Victorian times finally ceased and, together with the ‘threepenny bit’, the ‘half crown’, ‘florin, ‘shilling’ and ‘tanner’ all fell victim of decimalisation.
Some coins survived for a little while – the shilling and two shilling, albeit with a value of their decimal equivalents, could be used until 1980 and for a number of years you could spend an (old) six pence for a (decimal equivalent) of 2 1/2p.
The first casualty of decimalisation
When the new decimal coins were first circulated in 1971, they didn’t look exactly like the ones you will be familiar with today. Though the values and shapes have remained the same, some of the sizes and designs have changed over the years. You will also notice that the coins originally had NEW PENCE written on them, and we’ve lost a coin too. We no longer use the half penny, or ha’penny.
The Royal Mint Museum
The (new) half penny only lasted 13 years from 1971’s decimalisation when it became he first casualty of decimalisation
In 1983 the National Consumer Council told the Herald Tribune that “in terms of the coins in your pocket, it’s useless”. News stand workers in the early 1980s couldn’t even give the unloved halfpenny away, according to the paper. “We’ve got a bagful in the till, and although customers give them to us in payments sometimes, we can’t hand any out,” vendor Danny Curbishley complained.
Others were concerned over the demise of the halfpenny for other reasons:
“Sir, Some may dispute the ’rounding-up’ or down, of the halfpenny coin, but let not its existence be imperilled. It is indispensable for levelling off pendulum clocks,”
Priscilla Glover, The Times Letters Page in December 1984.
In 1984 the then Chancellor Nigel Lawson announced the coin’s demise in a written Commons answer, saying “most people would be glad to get rid of them”. The Royal Mint stopped making them at the end of February 1984, and it ceased to be legal tender in December 1984.
The Treasury’s delay in ending the halfpenny arose from fears that if the coin was abolished, retailers would raise prices to the nearest penny, which would in turn contribute to inflation. By 1984, the government had got to a point where it believed so few transactions would be affected, there would be no measurable impact.
At the time supermarkets pledges to round prices down rather than up, second class stamp rose from 12.5p in 1983 to 13p in 1984, then dropped to 12p in 1985 and the price of a dog licence went from 37.5p in 1984 to 37p in 1985.
By 1984 the coin had become more expensive to make than its face value and the British Museum’s modern money curator Thomas Hockenhull said:
High inflation in the late 1970s had devalued the coin to the point that it was insignificant and costly to produce. By 1984, it had an impractically small value and purchasing power.
The demise of the Halfpenny was not mourned by many, back on 1984 Dr. Kevin Clancy of the Royal Mint Museum said:
The decimal halfpenny didn’t have a long history. It was never top of the bill or had a starring role. But to dismiss the coin’s value entirely would do it a disservice.The halfpenny played an important role in the important transition to a new currency system. It was a point of familiarity. A way of reassuring people things hadn’t changed too much.
Times are a’changing
Today, pound sterling is used in the United Kingdom of Great Britain, Northern Ireland, the Isle of Man, the states of Jersey and the states of Guernsey.
It is the world’s oldest currency still in use.
Coin and Mint News recently reported that:
Several countries have dispensed with their lowest denomination coin in recent years. They include, in the last decade or so, the Bahamas, Canada, Chile, India, Japan, Moldova, Ukraine and the UAE, among others. Within the eurozone, six countries no longer issue them, and as many again are considering dropping them. Plans are afoot in the European Commission, meanwhile, to do away with them across the entire monetary zone.
Coin and Mint News
Last month a consultation was launched on the Isle of Man (IOM) on whether low value coins should be removed from circulation and how this could lead to the introduction of a rounding system for all cash transactions¹.
A public consultation has been launched which presents the case for withdrawing 1p, 2p and 5p coins, its potential impact and the necessary amendments which may need to be made to the IOM Currency Act.
It is agued that inflation has caused the purchasing power of 1p, 2p and 5p coins to diminish over time, leading to a fall in use exacerbated by precautions in place during the pandemic. People have tended to save coins as a result and they are then not actively circulated through the economy.
No Manx 1p and 2p coins have been minted since 2016 — the primary reason being that minting costs more than their face value.
The consultation explains how, should a decision be taken to remove the coins from circulation, the IOM Treasury would propose to introduce compulsory rounding for all cash transactions. This process would only take place on a total bill, not on the cost of individual items making up that bill.
So how might this work?
The IOM proposal is that where a total bill is being paid in cash, and the number of pence to be paid does not end in 0 or 10, the amount of the final bill would be rounded to the nearest 0p or 10p:
- £9.21, £9.22, £9.23 or £9.24 would round down to £9.20
- £9.25, £9.26, £9.27, £9.28 or £9.29 would round up to £9.30
The IOM Treasury is keen to stress that rounding would not apply to any card or digital transactions. Anyone who wanted to pay a total bill of £9.23, for example, via an online payment system or by debit, credit or store card, would still be charged £9.23.
The IOM Treasury Minister Dr Alex Allinson MHK said:
Any change to the way society uses cash must be carefully considered as its presence within our culture has been embedded over many centuries. There is, however, a need to properly examine how and why the use of coins has declined and what we should do to remove those deemed no longer useful.
The consultation process will enable the (IOM) Treasury to gather views and feedback from all corners of our community, which will help inform possible next steps.
While decisions are yet to be made, it is important to note the experience of many countries which have successfully navigated this process, including Australia, Belgium, Brazil, Canada and our neighbours in the Republic of Ireland.
Time to ask the question
According to Coin and Mint News several countries have dispensed with their lowest denomination coin in recent years. They include, in the last decade or so, the Bahamas, Canada, Chile, India, Japan, Moldova, Ukraine and the UAE, among others.
Within the eurozone, six countries no longer issue them, and as many again are considering dropping them. They report that plans are afoot in the European Commission, meanwhile, to do away with them across the entire monetary zone.
Now the Isle of Man are asking whether their lowest denomination coins had had their day (at least in a physical form).
Just 13 years after 1971’s Decimalisation the UK’s National Consumer Council stated that the half (new) penny was “useless” and some 52 years after Decimalisation do we need to ask whether the one, two, and perhaps the five pence pieces have also had their day?
The consultation document is available to view on the IOM Government website and can be downloaded electronically here.