The Decimalisation Con in the UK

[mpod001]

I'm probably a little late in this realisation, probably because I was born after 1971, but I have been working out how the British people were robbed of more than half of their wealth through the decimalisation of the pound.

Prior to 1971 there were:

12 pennies - 1 Shilling
20 Shillings - 1 Pound
and 240 pennies in every pound!!!!

Through decimalisation, the British people lost 140 pennies in every pound, as now there are 100 pennies in each pound

...and now they're wanting to rob the world again through the supposed 'economic reset'?

I just wanted to share this as I had this realisation this morning and wondered what other peoples opinions were!?

Thanks for reading guys!

[Nick Matkin]

There were a number of options in going decimal. In Australia for example (where of course they also used pounds, shillings and pence) they decided to go for the two Australian dollars to the old pound, each worth 10 shillings in old money, but consisting of 100 cents. (Australians, please correct me if this is bollocks!)

In the UK we opted for the pound to stay the same value, but divided it up into 100 new pence, or 200 half pence - we didn't 'lose' anything really, just a slightly coarser way of dividing the pound up; 200 units rather than 240 units, which lead to some fairly awkward roundings - see later.

We certainly weren't "robbed of more than half" our wealth! I think we would have all noticed!!

One shilling (12 old pence) was exactly 5 new pence, or 10 half new pence. Don't forget that the old coins didn't vanish overnight.

To start with, for a number of years prior to decimalization, when new one shilling/florin (two shillings) coins were issued, they were the same size and shape as the equivalent 'old' money, but with different stampings and marked '5 New Pence', '10 New Pence'. They of course had the same monetary value as the old equivalent coins and worked in co-operated machines. The only completely new coin issued before the changeover was the 50 pence coin, worth exactly 10 shillings.

On the day of decimalisation (D-Day as it was called!) the new copper coins appeared in circulation, half, one and two pence coins. I guess shops had them delivered days before and they used them on D-Day, 15 February 1971.

There were short TV programmes explaining decimalization for months before - see Youtube.

So from 15 February we now had old and new coins in circulation. I remember going to a shop asking for a penny chew. This cost one old penny or one new half penny. But this is where inconsistencies and sharp practice started. If I handed a 5p coin, I got 10. If I handed a shilling, I got 12. If I handed 6 old pence (6d) I got 6 or 5 depending on the generosity of the shop keeper as 6 old pence was worth exactly 2.5 new pence! One half new penny was worth 1.2 old pennies.

You could mix old and new coins but you were at the mercy of the shopkeeper how they 'interpreted' the value, since there were old and new prices that didn't exactly match. What was 2 new pence? Five or four old pence? And lots of other combinations of sixpences and 2p for example.

Gradually (in about two weeks?) the old coins were removed from circulation, and the inconstancies disappeared. When I say 'old coins' I mean the old pennies and threepenny bits which had no exact decimal equivalent, but the silver coins (sixpences, shillings, florins and half-crowns) stayed in circulation for years because there was no need to remove them. By then you got 10 chews whether you handed over a shilling or 5p!

The old sixpence (6d/2.5p) was removed not long before the new half penny was removed from circulation (when inflation made the half penny too small a value to bother with - about 1981?).

(I'm sure there's loads more about all this if you Google "UK decimalisation")

Changing currencies would have been even more complicated in Europe when countries adopted the Euro because its base value was not something they were familiar with. At least our pound before and after D-Day bought the same amount. But converting Marks, Pesetas, etc, to Euros in your head must have been hard going and wide open to fiddling the public!

Sorry, that's probably more than you ever wanted to know! But it was a trip down memory lane for me, I was 13 on D-Day...

Nick

[jc71]

Hi mpod,

You are making an assumption that something costing 10 pennies before the switchover cost 10 new pennies after. I doubt this was the case, but I wasn't there either (well I was born that week but didn't use cash in those early days )

Just my pennyworth.

JC

[araucaria]

The trouble is that the effect of larger pennies that is so obvious on a child’s pocket money tends to be the same for larger sums. Changing the ten-shilling note to a 50p coin was another move that devalued the money: it looked barely more than the old half-crown, worth only a quarter of that amount. And this effect can be compounded by people who are unfamiliar with the new money rounding things up. When we lost the French franc to the euro in 2002, the 1 euro coin, worth 6.55 francs, looked exactly the same as the old ten-franc coin – which was handy enough for such things as supermarket trolleys. So that to start with was like a 33% devaluation in people’s minds. But what really caused the inflation was how prices got rounded up. My work gave me a close look at some catalogue prices. The first year, if you had something costing 75 francs, you advertised it at an exact €11.43, but the next year, instead of say €11.50, the price would go up to 12 or even 13 – only a couple of units, but 6 ½ times bigger than the units you were used to. Was this inevitable inflationary effect deliberate on someone’s part? Probably.

[boja]

One CON which (although only small) must have helped certain people - as pointed out by Nick, was that the MAJORITY of prices in the shops which did not match up exactly - were rounded UP. Only if you had a benevolent shopkeeper, would you find any prices rounded down.

We DID notice these inconsistencies at the time, and it still sticks in the throat of many of us old-timers.
If the subject comes up, it's one of the first things that they'll tell you.

[Gardener]

Well there was the individual's ability to quickly convert mentally, and no 10d (old pence were d) worth of x didn't cost 10p (new pence were p) after, but it soon did.... there was a huge hike in prices and it was well taken advantage of. The oldies found it the hardest, but it was reasonably easy to mentally convert, we weren't encouraged to do that of course.

My son was born that week on the 20th, the nurses called him decimus, we called him Marcus. So I actually missed the big D day lol.

Posted by jc71 (here)
Hi mpod,

You are making an assumption that something costing 10 pennies before the switchover cost 10 new pennies after. I doubt this was the case, but I wasn't there either (well I was born that week but didn't use cash in those early days )

Just my pennyworth.

JC

[sdv]

Sorry if this is off-topic, but all shopkeepers here ''round down'' the bill as one- and two-cent coins have been discontinued but retailers still use the 99 cents as a marketing tool. So, if your bill is between 19.96 and 19.99 and you give a 20 note, you get 5 cents change.

Is there anywhere else in the world where the smaller coins have been discontinued and retailers round down the total to the nearest 5?

I admit that it is a bizarre practice, but everyone has become so used to it. Retailers till use the 99 cents psychology and the total bill is rounded down to benefit the customer. Double yipee when they discontinue the 5-cent coin as we are so used to the rounding down practice that there would be bloodshed in the streets if it was not continued with rounding down to the nearest 10!

[Nick Matkin]

I have been told two reasons for the 99p/99c pricing.

One is that the customer perceives $4.99 as $4 and not $5.

The other reason was that even in the old British pre-decimal currency, a price of £4.19.11 meant the till had to be opened to give 1d change when the till operator was handed a £5 note, thus preventing it being put in their pocket! The same would apply now of course with £4.99.

But with the reduced use of cash, especially for cheap items, the latter reason seems less likely now, so I guess now it's predominately the first reason.

(For non-British forum readers, I have no idea what the pound "£" symbol comes out as on your screens! Is it a hash "#"?)

Nick

[scanner]

Yes , we were well robbed and every time they want to rob us they just help themselves . Like funding private banks with our tax and funding private funerals of old PM's and MPs help themselves when they have to buy a duck house, the robbery continues . It will be Greece type haircuts next , but it's all an illusion . It's just paper and bits of metal , soon to be just numbers on a computer . Then the robbery will be complete .

[mosquito]

Posted by Nick Matkin (here)
.... In the UK we opted for the pound to stay the same value ....

No we didn't, it was IMPOSED on us by the government.

My recollections are very clear - prices of most things doubled overnight. Those that stayed more or less the same during February then doubled within a very short period.

The immediate impact on my life (I was 12) was that my bus fare went from 4d to 3p overnight, as did the cost of "The Beano". Various sweets and chocolate bars also doubled. My mother complained non-stop when washing powder doubled after about 1 month.

I remember seeing a chart of the cost of a newspaper in the UK analysed over 100 years, the biggest jump was in 1971 !

The other part of the con of course was in providing us with that irritating little half-new-penny coin, which everyone used to throw away, and withing a fairly short time it was done away with, thereby leaving us with the 1p as the lowest value coin, essentially twice the value of the old penny. A similar trick that gets regularly pulled is to withdraw low value bank notes, 1 pound for example, thereby making a pound "loose change" in the minds of the masses.

It makes me laugh now when I hear tory politicans rant on about "saving the pound" rather than join the Euro (not that I think THAT'S a particularly good idea !) The pound was lost long ago, and if truth be told, the pound has really been worthless since 1948, when they stopped using precious metals to make our coins.

Does anyone else remember that ghastly child the BBC used to roll out, telling us that we need to "think decimal" ? I wonder where he is now.

[Nick Matkin]

Yes, there was inevitably 'rouding-up' by merchants, suppliers etc. And although I was only 13, I remember adults complaining about the 'con'. But I think it was only on smaller amounts between the 6d and 2.5p points. Something costing 10/- cost 50p, not 60p or 70p because we all knew 50p was exactly the old 10/-

The new half penny was worth exactly 1.2 old pennies (and you can do the maths: 200 new half pence = 240 old pennies, therefore each 1p = 2.4d and 0.5p = 1.2d).

Yet another option was that was considered was to keep the buying power of the penny the same, but have a pound only contain 100d instead of 240d. That would completely avoid all rounding errors. Something costing 7/4d would now simply be labelled 88d (7x12+4). Would that have been more acceptable? Coinage would have been in some ways more awkward, until it was changed, as what would be the point of legacy 3d/6d/12d/24d coins in a decimal system? Still, I could have handed a 1/- (12d) coin and still bought 12 x 1d chews with it!

Perhaps that was one reason, but I can think of another disadvantage of doing it that way. Something costing the old £5/2/7d pounds wound now be labelled £12.31 new pounds! (240x5+24+7/100). I guess it was decided that no amount of trying to explain to the vast swathes of the 'hard of thinking' that if you were earning 8/4d an hour (100d) before the change-over you'd be still be earning 100d per hour (8/4d) after the change!

I have no evidence, but I strongly suspect the method chosen/imposed was a result of looking around the British Commonwealth to see what methods had been introduced elsewhere, and match that with the best guess of British public's psychology and what would be acceptable/understandable.

OK, all the old fogies who were happy with the old system; hands up those who would like to reintroduce it, complete with original coinage? It would be great having pockets bulging with halfpennies, pennies and threepenny-bits; it would really give us all a sense of inflation since 1971.

Depending on how it's calculated, £1 in 1971 is now worth between £11 and £26! That's inflation for you, but name one country that hasn't had inflation - including Communist ones? Isn't inflation part of economics (OK social control if you like) going back thousands of years?

Nick

[Gardener]

Mine too Mariposafe. It was in the pennies not the pounds, small things on a shopping list which were hiked very quickly in the following months hence the spike in inflation during the following year. The maths got infinitly easier especially for kids in school by using the base 10/100 etc

My recollections are very clear - prices of most things doubled overnight. Those that stayed more or less the same during February then doubled within a very short period.

[Nick Matkin]

Posted by mariposafe (here)
My recollections are very clear - prices of most things doubled overnight. Those that stayed more or less the same during February then doubled within a very short period.

Did that have anything to do with decimalisation, or just the start of increasing inflation which got pretty bad starting in the early 1970s? Was it just coincidence? I don't know, I'm not an economist, but the UK inflation charts show a rising trend from about 1970.

Was it the same in the US back then?

Nick

[mosquito]

Posted by Nick Matkin (here)

Posted by mariposafe (here)
My recollections are very clear - prices of most things doubled overnight. Those that stayed more or less the same during February then doubled within a very short period.

Did that have anything to do with decimalisation, or just the start of increasing inflation which got pretty bad starting in the early 1970s? Was it just coincidence? I don't know, I'm not an economist, but the UK inflation charts show a rising trend from about 1970.

Was it the same in the US back then?

Nick

Was it "just coincidence" that on 14th February 1971 my bus fare was 4d, and on the next day it was 3p (7d) ? Errrm, are you serious ?

As Gardener said - it was the cheap things that doubled in very short time which, when you are a child, are obviously the things you notice.

[Gardener]

Yes it did, its was the trigger of inflation which eventually culminated in a huge house price inflation, you won't remember 'gazumping' but no doubt you have heard of it. I recall paying mortgage interest at one stage of 15%.....(though my monthly payment was only £15.10s)..........though 12.5 % was general at that time.

Posted by Nick Matkin (here)

Posted by mariposafe (here)
My recollections are very clear - prices of most things doubled overnight. Those that stayed more or less the same during February then doubled within a very short period.

Did that have anything to do with decimalisation, or just the start of increasing inflation which got pretty bad starting in the early 1970s? Was it just coincidence? I don't know, I'm not an economist, but the UK inflation charts show a rising trend from about 1970.

Was it the same in the US back then?

Nick

[Nick Matkin]

Posted by Gardener (here)
Yes it did, its was the trigger of inflation which eventually culminated in a huge house price inflation, you won't remember 'gazumping' but no doubt you have heard of it. I recall paying mortgage interest at one stage of 15%.....(though my monthly payment was only £15.10s)..........though 12.5 % was general at that time.

My parents were guzumped