The British Gold Sovereign is today’s most popular and sought after investment coin. The reason – it is the basis of the monetary reform, which ensured the financial stability of the country since the beginning of the 19th century. Moreover, it is one of the reference currencies for the “gold standard”.
Because of its importance, it continues to circulate as legal tender to this day. The longest reigning monarch in the history of Great Britain, Queen Elizabeth II, was represented on the reverse of the coin with five different portraits . In total, more than 80 million coins have been issued. Her successor, King Charles III, will probably continue issuing new gold sovereign coins.
In this article we discuss the history of the gold sovereign, the reasons and context for its re-emergence in the early 19th century, and why it is such an important coin, still produced and sought after today.
England Without The Gold Standard: The Great Inflation Of The Napoleonic Wars
At the end of the 18th century, Britain became involved in the war against France and approached the matter as before, financing its expenditure by borrowing. It soon became clear as day that he would not be able to survive financially, as between 1793 and 1798 alone his national debt doubled. Interestingly, at almost the same time, the new revolutionary regime in France was already bankrupt, perhaps with the first hyperinflation in history. This development greatly aided Napoleon Bonaparte’s rise to the throne, as we discussed in the article about another popular gold coin, the French franc.
Gold has always been a guarantor of personal financial stability and a limiting factor in government spending. When debts mount, creditors are paid in gold, and when a country’s reserves run out, it goes bankrupt. Due to foreign and domestic borrowing, Britain’s gold reserves had fallen to only 20% by the end of 1795. Private banks were panicking over a possible French attack. Thus, in February 1797, Britain abandoned the gold standard and two years later an income tax was introduced.
But this only makes Britain’s problems worse. She continues to cover her expenses through loans. Much of the borrowed funds are “unfunded” – the government does not receive them from taxes or through any other channel. Moreover, their share of total loans increased significantly – from under 20% to almost 80% by 1808. The main buyer was the Bank of England, and this debt was financed by printing money, i.e. inflation. We are witnessing a similar phenomenon in Europe today.
The amount of money in circulation rose from £10.3 million in 1797 to £27.25 million in 1815 – an increase of 163%. The result is a rapid rise in consumer prices and concerns about the political stability of the rulers. In response, the price of gold in Britain also rose rapidly as people believed in physical gold . The increase on the free markets is more than 20%, although officially its value was fixed by Sir Isaac Newton at 4.25 pounds per troy ounce.
To find out the reasons , the authorities order one of the most famous investigations in monetary history – that of the Gold Committee . The report of the inquiry, published in 1810, recommended a return to the gold standard. The Bank of England has made the same request to parliament repeatedly over the years.
The Second Life Of The British Gold Sovereign
In the early 19th century, the most popular gold coin in the empire was the guinea. At its launch, 2 centuries ago, it would have been equal to a pound or 20 shillings of silver. As gold increased in value relative to silver over time, its value sometimes rose to 30 shillings. Guineas weigh 8.3 grams of 22 carat gold, correspondingly containing 7.7 grams of the yellow metal.
Such fluctuations are not popular with the public. The authorities note that:
“There is a general desire among the populace for gold 20 and 10 shilling coins instead of silver guineas, half guineas and seven shillings.”
So in 1816, the authorities began to create a new standard where one pound equaled 20 shillings. But it has to be more than a gold coin. With it, Britain must demonstrate to the world its power as the victor of the Napoleonic Wars (1804-1815) and as the empire on which the sun never sets. Returning to their roots, they found the most appropriate way to show all this through a single currency – the British sovereign.
The Original British Sovereign, Of Henry VII
After the Wars of the Roses, Henry VII ascended the throne of England as the victor. Among his goals was the task of uniting the country and strengthening its position in international relations. Fourteen years after his coronation, in 1499, he created a gold coin to demonstrate both—the sovereign.
Its name comes from the ruler himself, depicted on the obverse of the coin sitting on the throne with the symbols of power – the crown and the scepter. The reverse shows the coat of arms surrounded by the unified English rose. The coin is massive for its time, with a diameter of over 4 cm, a weight of 15.5 grams of gold and the extremely high purity of .958 or 23 carats. In addition, the original sovereign was highly innovative in British monetary history as it was:
- The first one pound coin;
- The largest gold coin issued in England at the time of creation;
- The first coin to realistically depict the ruler;
- The coin of the highest purity.
A pound doesn’t seem like a significant amount. But five centuries ago it was the wages of a craftsman for three months and a servant for a year. Probably a small proportion of the English at that time had never seen the sovereign alive. But it was a symbol of royal power, circulating among and through the rich, rulers and merchants – throughout Europe. It became such an emblem of stability and monarchy that, although Henry VIII reduced its purity to 22 carats, it is still the standard for monetary systems in the English-speaking world today.
