Saturday, November 26, 2005

AUN! Thoughs: Monetary Reform 2, Was Decimalization a Mistake

This is a continuation of my thoughts on monetary reform. My first post on the subject is here.

For more than a thousand years the English speaking people used a pound made up of 240 pennies. After the United States gained its independence, the new nation decided to abandon the English system of monetary weights. It its place they adopted the Spanish dollar as a unit and divided it into decimal units of tenths, hundredths, and thousandths. Later Canada and the other dominions adopted a dollar. Great Britain decimalized the pound after World War II though the first step in that direction, the introduction of a tenth pound coin, the florin was taken in the mid 19th Century.

I believe this may have been a error. The idea is that decimal systems are supposed to be easier because we use a base ten number system. Thus the idea seems to go it is easier to think in hundreds than 240s. However, I who have never used the predecimal system in real life, find it as easy to think in as a decimal system and it has some real advantages

Because 240 is the product of 12 and 20 it is more easily divided into fractions than 100.
While the dollar can only be divided evenly by 2, 4, 5,10, 20, 25, 50, and 100. In contrast, 240 can be divided evenly by 2, 3, 4, 5, 6, 8, 10, 12, 15, 16, 20, 24, 30, 40, 48, 60, 80, 120, and 240. The only advantage to the base 100 system is that it is divided evenly by 100 so that percentages can be used. However there is an answer to one percent of 240, it is 2.4. The use of a tenth penny coin would allow the use of percentages in the 240 penny system and eliminate even that advantage. In contrast there is no answer to what is the third, sixth, or twelfth part of the dollar.

Lest some one say that a 1/10th penny would be worth to little to be practicable, let me point out that with in the last 200 years the British government issued a Quarter Farthing, that is a coin worth one sixteenth of a penny. Further at today’s silver price, a tenth penny would have a value of 4 cents.

Thus I conclude that decimalization was a mistake.

Writing this made me go and comb through the collection of coins our family has accumulated from foreign travel. Among the interesting numismatic items I found are:

British: a 1907 Edward VII Shilling, Florins (two shilling coins) and Half Crowns (eighth pound) of George V and Elisabeth II, six pence of Elizabeth II, three pence of Elisabeth II, Pennies (not new pennies) of George V, George VI, and Elisabeth II, and a Half Penny Elizabeth II.

Canada: a 1907 Edward VII Cent, 1916 and 1920 George V Cents, a 1901 Victoria Half Dime, two Half Dimes of George V, a 1908 Edward VII Quarter Dollar, and a 1919 George V Quarter.


xavier said...

Nope decimalization wasn't a mistake. Only the Brits persisted with this strange counting system for money.
The fact that everywhere else in the world has adopted indicates an underlying rationality that a base12 system doesn't.
I'm glad that we divide the currency by tens


David Stewart said...

Decimilisation wasn't a mistake at all. Regardless of how fractions fit into the matter, it is still easier to count in tens rather that twelves. It is easier to divide in tens, multiply by tens ... you get the point.

I've never heard anyone say it was a mistake before.