Where does the term Sterling as in 'Pounds Sterling' originate

A. The etymological derivation of the word Sterling is a bit vague, but a strong contender seems to be from the Anglo-Saxon word steorling, which referred to one early type of Norman penny marked with a star. Other sources find the word steorling referring to coins issued in the Saxon kingdoms in England as early as the year 775. While another, less widely accepted theory is that it comes from the Easterlings, coiners from Germany, who came to England during the 12th century. Whichever of these is true, the pound sterling, by whatever name it was known, has been the basic monetary unit in England - and later Britain as a whole - since the Anglo-Saxon era.

Q. Wasn't it worth a lot more 'in the old money'
A. Yes it was, and you literally got more pennies to the pound. The coinage was based on an actual pound weight of silver, which was then minted into 240 pennies. If large financial transactions took place, payments were made in what became termed 'pounds of sterlings'.

After the Norman Conquest a new division, the shilling, worth 12 pennies, was introduced. These units of currency were known by the Latin names libra (pound), solidus (shilling) and denarius (penny). Prices were expressed either as, for example, 4 2s. 6d - giving rise the colloquial term LSD - or 4 2/6.

While it may seem odd in this decimal age, throughout most of history a pound was, in real terms, worth a very great deal, so to be able to subdivide it by as many whole numbers as possible was much more important than being able to break it up into units of ten. Once you appreciate that a shilling, 12 pence, can be divided by 2, 3, 4, and 6 - not to include halfpennies and farthings - while 10 is divisible only by 2 and 5, the logic becomes clear.

Q. If it's so logical, why don't we use it now
A. In 1971 the pound sterling became decimalised. This reflected the fact that simplification was deemed a good thing - even most die-hard LSD-ers would surely admit that it is an easier system. The new currency also reflected more accurately the real value of 'the pound in your pocket', as Harold Wilson, the Labour prime minister in the late 1960s, termed it.

It was also an iconoclastic time, and LSD was seen as symbolic of a Britain clinging to its past. Times had changed, and not only the Empire, but the pound had diminished in size and might. By the 1960s the farthing had gone, as the lowest unit of currency it was worth so little that it became more expensive to produce than its purchasing power. This trend has continued to the present day, with coinage becoming physically smaller, with the halfpenny being withdrawn altogether.

The same has happened with notes: as they are worth less they are reduced in size, and, in the case of the 1 in England and Wales, replaced entirely by coins as the cost of replacing notes becomes prohibitive.

Q. What is sterling silver
A. The term sterling became a measure of the purity of silver, and in order to qualify it has to be a minimum 92.5% pure. This measure derives from the silver alloy from which English pennies were minted, which was 925 parts silver to 75 parts copper, a mixture that remained the standard for British coinage until 1920. Between 1920 and 1946 the silver content was reduced to 50% and after this no silver has been used at all, having been replaced with copper and nickel. The currency had, in fact, ceased to be tied to the value of silver at all in 1821, when it was tied to the gold standard.

Q. What's the future for sterling
A. That will entirely depend on how we vote when/if there is a referendum on joining the Euro. Or perhaps we'll be using dollars in a few years time. Some would say that British currency died thirty years ago. Whatever happens, you can't get as many Fruit Salads for ha'penny as you used to...

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By Simon Smith