How did the pound come about?

In today’s issue:

• An entire tribe of Alans
• Constantine, Offa, Alfred, William (the bastard) and Athelstan
• Don’t pay the Danegeld

Earlier this month, the intrepid Dominic Frisby filled another gap in my brain. His exceptional piece was about “the origins of the British pound, the oldest currency in the world.” With permission from Dominic, you can read it below.

But fair warning – it will upset and then reorder how you perceive many of the things in your daily life. Your money, your history, your investments and perhaps even your sense of humour.

Not many stories can feature so many great kings from so many different lands as the story of how the pound came about. It’s a tale of German frying pans, Iranian tribesmen and a Roman emperor’s questionable tactical nouse.

Dominic publishes on his Substack The Flying Frisby. If you enjoy Fortune & Freedom, you’ll love his work.

But just in case you’re too lazy to click on over this Boxing Day, here’s how he described the origins of the pound…

Kind regards,

Nick Hubble
Editor, Fortune & Freedom

PS By the way, Dominic Frisby was supposed to be a headline act for our Gold Summit. But he was too busy galivanting around Buenos Aires at the time. His catalyst for why gold will go on surging in 2025? “Dedollarisation.” That got plenty of mentions from our guests at the Summit in the end. But they also gave some rather surprising reasons I hadn’t heard before…

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Danes, Dykes, and Denarii: How Did The Pound Come About?

Dominic Frisby
The Flying Frisby

“If once you have paid him the Dane-geld, You never get rid of the Dane.”

– Rudyard Kipling

The winter of 406-407 was bitterly cold across Europe. The Rhine froze over, enabling hordes of Vandals, Alans – I love the fact that there was a tribe of Alans – and Suebi to make their way across the river, and into the Roman empire. They were violent with hunger, from the cold and greedy for what they had admired for so long on the other side.

The response from Rome was slow, weak and inadequate.

In Britain, Rome had already lost the north and west to warlords. The Roman armies in Britain, who, at best, had been paid with debased money, feared these Germanic tribes would cross into Britain next, so, led by Constantine III, who declared himself “Western Roman Emperor”, they made their way across the Channel and into Gaul, leaving ‘Britannia’ to fend for itself. We do not really know if it was Rome that gave up Britain, or Britain that gave up Rome, but, either way, the Dark Ages had well and truly begun.

Gold, silver and bronze coins had been widespread under the Romans. They were used to pay taxes, and often re-minted to pay the army and the civil service. But after Constantine III’s departure, few coins were either minted or imported. Judging by the numerous hoards found from the period, many people buried their money – presumably to keep it safe in this unruly new environment of no military protection and merciless invasion from Angles, Saxons and other tribes from the continent. With the lack of new supply, existing coins were re-used. Clipping – cutting off the edges to steal metal – became widespread. The previously vigorous late Roman monetary system crumbled. It was not for another 200 years that minting properly started up again.

The Anglo-Saxon invaders initially used gold more for adornment rather than as currency. Though there are examples of earlier Anglo-Saxon coins, King Eadbald of Kent was the first Anglo-Saxon whose name we actually know to mint coins. This was around 625AD – small, gold coins called scillingas (shillings), modelled on coins from France. Numismatists now call them thrymsas.

As the century progressed, these coins grew increasingly pale, until there was very little gold in them at all. From about 675, small, thick, silver coins known as sceattas came into use in all the countries around the North Sea, and the gold shilling was superseded by the silver penning, or penny. As money, gold fell out of use almost altogether, though silver had something of a boom.

It is thought the word ‘penny’, like the German ‘pfennig’ derives from the pans into which the molten metal for making them was poured. ‘Pfanne’ is the German for ‘pan’. Another theory is that it derives somehow from the denarius, as the symbol for the penny used to be the d. Likely a bit of both.

The Mercian King Offa, he of dyke fame, who reigned for almost 40 years from 757 to 796, must be one of the greatest Anglo-Saxon kings, certainly the greatest of the 8th century. As well as his dyke, which protected his kingdom from Welsh invaders, and provided a barrier by which he could collect duties, he is credited for the widespread adoption of the silver penny and pound as a unit of account (though the pound was in use before his reign, he still gets the credit). His coins, with portraits and intricate designs, were as accomplished as anywhere in Europe at the time. His system, though probably imported from Charlemagne and the Franks, for reasons which will become clear, almost certainly dates back to the Romans. 12 silver pence equalled a scilling. 20 scillingas, or 240 pennies (12 x 20), equalled a pound weight of silver. Thus did the pound we still use today get its name – it was, simply, a pound weight of sterling silver.

The Latin word for a “pound” is libra and the pound sign, £, is a stylized writing of the letter L. The d meanwhile used for pence comes from the Latin denarius. The roots of the British system of money are Roman.

Offa’s system remained standard until at least the 16th century and, in many ways, until decimalization in 1971. You had to add up each unit of currency separately in this format: £3.9.4, which would be spoken “three pounds, nine shillings and four pence,” or “three-pounds, nine and four.” To add, you would calculate each unit separately, then convert pence to shillings, leaving leftover pence in the right column. Then convert the shillings to pounds (with leftover shillings in the middle column). And then add up the total pounds. It sounds complicated when you explain it, especially to those oriented in metric, but, like all traditional measures, it is quite intuitive in practice.

Offa’s systems were gradually consolidated over the subsequent centuries, especially as the kingdoms of Anglo-Saxon Britain began to merge. In the 860s, for example, the kingdoms of Mercia and Wessex formed an alliance by which coinage of a common design could circulate through both of their lands.

The Viking invaders found coinage systems far more sophisticated than their own, and the Danegeld, the protection money with which they were bought off, was paid in silver pennies. I had always thought the “geld” in Danegeld meant “gold” but in fact it means yield, and the Viking invaders demanded this tribute wherever in Europe they ravaged.

The Danegeld system was quite efficient – on both sides. For the invaders, they were often paid more than they could raise by looting, without having to fight. For the locals, the ravaging was avoided, although, as Rudyard Kipling noted in his poem on the subject, “if once you have paid him the Dane-geld, You never get rid of the Dane.”

The Danegeld probably also motivated improvements to Anglo-Saxon coinage. To pay his own soldiers, to build forts and ships, and to pay Danegeld, Alfred the Great increased the number of mints in his realm to at least 8. His successor Athelstan had 30 and, to keep order, passed a law in 928 stating that England should have just one currency. Ever since, there has been just one. This was many centuries before standardisation in France, Germany, or Italy.

When William, Duke of Normandy, invaded England in 1066, he succeeded where his Viking ancestors had failed for over 270 years, in that he managed to conquer all of England. It meant he took control of English coinage, which was far superior to that of his homeland. William’s coins, struck back in Normandy, are remarkable for how poor they are, compared to their English counterparts.

He had at least seven types of English pennies struck with his name on, enabling him to achieve the rebrand that was so important to him. No longer was he William the Bastard, as he was then known. Now he was William the Conqueror. He let the world know through his coins. It worked: that is how we still know him today.

It is a little ironic that the pound should be so named for its silver. Because, from the time of Isaac Newton and the founding of the Bank of England, silver had very little to do with the pound. Only gold.

That story is told here.

Dominic Frisby
The Flying Frisby