Magazine article Management Today

The Pound's Fluctuating Fortunes

Magazine article Management Today

The Pound's Fluctuating Fortunes

Article excerpt

Long, long ago, on the distant shores of an inland sea, there was a group of countries a little like the EU. Just like the EU, these countries traded among themselves and squabbled incessantly (though they resolved their differences in battles not Brussels). But - unlike the EU - they managed to effect a kind of monetary union without even trying. How? Well, their coins were just lumps of precious metal and - since they had an intrinsic value - nobody really cared whose temple seal happened to be on them.

All this took place in the Middle East, circa 1,000 BC. But coinage continued in the same vein for the next millennium. With face and metal value as one, few merchants bothered with their local bureaux de change. Like today's dollar, a well-respected currency could be used almost anywhere. At the Roman Empire's zenith, Chinese traders would cheerfully accept the gold aureus in payment. But all did not augur well for Rome's coffers and, under Nero (whose fiscal acumen mirrored his political nous), the first in a series of damaging debasements took place. And, as the coins' gold content fell, so did public confidence, especially among foreigners.

With the collapse of the Pax Romana came the Dark Ages, and an end to international trade and exchange. Almost 1,000 years passed before money-changing reappeared in northern Italy. By the 15th century, however, pan-European trade was back in force. Increasingly sophisticated monetary systems led to currencies which, while backed by precious metals, were no longer necessarily `worth their weight in gold'. To cope with this, foreign exchanges sprung up, first on the Continent, then in Britain.

Although the events of the 15th and 16th centuries did not have as immediate an impact on exchange rates as today's affairs of state, they nonetheless left their mark. Henry VII - a prudent and frugal monarch - reigned over a relatively stable pound, in sharp contrast to his bellicose, bon vivant successor, under whom sterling fell sharply against the Venetian ducat. Moreover, as with today's exchanges, movements were often counter-intuitive, with the pound appreciating in the late 1580s during the Armada threat. Later, the 17th century was characterised by several important movements. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.