COMMERCIAL £5, £1 or 10s Units In U.K. Decimals?

Press, Volume CII, Issue 30108, 17 April 1963, Page 19

COMMERCIAL £5, £1 or 10s Units In U.K. Decimals?

[Bp "LOMBARD" of the "Financial Times"! (Reprinted by Arrangement)

The decision of both Australia and New Zealand to replace their £ s d currency systems with decimalised ones in a few years’ time clearly leaves Britain with no alternative but to make the change herself at similar speed if she wants to avoid earning the unenviable distinction of being the only major country in the world operating an antiquated coinage mechanism.

The official committees which earlier on. investigated the question of decimalising the Australian and New Zealand currency systems found no great difficulty in reaching the conclusion that it would be advantageous to make the change. And they encountered hardly more difficulty in deciding that the most satisfactory way of carrying out the exercise would be to replace the £ as the basic unit by a 10s one divisible into ten shillings of present value but with a sub-division of the shilling into ten pennies instead of the present twelve. Now, after lengthy consideration, the Governments of both countries have fully endorsed their committees’ findings and announced that the change-over will take place in the 1966-67 period. South Africa having already trodden this path, the fall of these two other important bastions of the £ s d system will leave as about its only remaining supporters of substance, the United Kingdom, the Irish Republic and a

number of past and present British dependencies in Africa, some of which have themselves already indicated that they will be decimalising their currencies as soon as they conveniently can. "Image” Issue

The United Kingdom could, of course, continue to hold out nevertheless. But a country that is already halving not a little trouble with the presentation of its “progressiveness image" is hardly in a position to continue for long in inglorious isolation in the matter of modernising the currency system. Bearing in mind that there are considerable practical disadvantages too in continuing to cling to a non-decimal currency system in a decimalminded world, it seems that the die is now cast for the United Kingdom—and this whatever emerges about the cost and bother of making the change from the official inquiry into decimalisation here due to report in the summer.

It is now even more apparent than ever, indeed, that the only important question of principle that remains to be resolved in the British case is which of the various methods of decimalising would be most appropriate for us to adopt. Some of the more freakish of the possible procedures—such as those using 100 pence and £5 as their focal pointe—have been found to have a strangely large number of powerful supporters in the United Kingdom during the recent investigation. But, even so, it is still my contention that for practical purposes the choice lies between the system retaining the present £ as its basic unit and that hinging on the use of the 10s for this purpose so far preferred by all £ s d countries of importance that have decided to decimalise their currencies. Vital Point

On this vital point, I will admit that the fact that the South Africans, the Rhodesians, the Australians and the New Zealanders have all in turn come down in favour of the second of these alter, natives does not finally dispose of the ease for retaining the £ in the United Kingdom’s case. For their circumstances are in some respects different from our own. But I do suggest that it means that it would have to be possible to call upon some extremely strong arguments of a special character for doing so in order to be able to reject the very powerful arguments for selecting the 10s — 100 pennies system which have clearly decided the issue in all these other cases.

Are there special arguments for retaining the £ of this calibre? The banking community has been striving to convince the decimalisation inquiry that there are. Its representatives have fervently maintained- that the replacement of the £ would have damaging effects of a far-reaching kind on London’s functions as an international financial centre. It is obvious that a decimalisation operation which retained the present £ would be less likely to inconvenience City institutions operating in the international field than one hinging on the use of a new basic unit. But it is surely inconceivable that those who find advantage in using London’s financial

facilities are going to be ready to go. to all the bother and expense of moving their custom solely because they are asked to accept a simple and wholly technical adjustment in sterling trading

In short, the “City argument” for retaining the £ cannot be regarded as being nearly weighty enough to cancel out the arguments for doing as all the others have done.