The Gold British Sovereign: Its Significance In History

The gold British sovereign is the most popular and sought-after investment coin from the United Kingdom today. It not only witnessed the zenith of the British Empire before the First World War but also played a crucial role in making it possible. This is because the gold sovereign was the cornerstone of the monetary reform that ensured the country’s financial stability from the early 19th century. Additionally, it serves as one of the benchmark coins for the “gold standard.”

Due to its importance, the sovereign has been minted by rulers over the past two centuries and continues to circulate as legal tender. Queen Elizabeth II, the longest-reigning monarch in British history, was featured on the coin with five different portraits, totalling over 80 million in circulation. Her successor, King Charles III, is likely to continue its minting.

In this article, we explore the gold British sovereign, its reappearance in the early 19th century, and the reasons behind its enduring significance. Although this gold coin first appeared more than 500 years ago, its modern form was established “only” two centuries ago.

England Without the Gold Standard: The Great Inflation of the Napoleonic Wars

At the end of the 18th century, Great Britain found itself embroiled in a war against France, approaching it as with any conflict of the era – by financing its expenses through loans. However, it quickly became clear that this strategy was unsustainable, as the national debt doubled between 1793 and 1798. Interestingly, around the same time, the new revolutionary regime in France experienced what might be the first instance of hyperinflation in history, leading to bankruptcy.

Gold has always been a safeguard of personal financial stability and a check on British government spending

When debts increase, creditors demand payment in gold, and when a country’s gold reserves are depleted, it faces bankruptcy.

The Bank of England found itself on this precarious path, with its gold reserves dropping to just 20% by the end of 1795 due to external and internal loans. Private banks faced the threat of a banking panic amid fears of a French attack. Consequently, in February 1797, Great Britain abandoned the gold standard, and two years later, an income tax was introduced.

Read more on the topic here: What is the gold standard?

However, these measures only exacerbated Britain’s financial problems. The country continued to cover its expenses through loans, with a large proportion of these funds being “unfunded” – not sourced from taxes or any other revenue channels.

The share of unfunded debt grew significantly, from less than 20% to almost 80% by 1808. The primary buyer of this debt was the Bank of England, which financed it by printing money, leading to inflation. This mechanism is notably similar to some of the financial practices observed in Europe today.

See more on the topic: How does inflation affect gold prices?

The amount of money in circulation surged from £10.3 million in 1797 to £27.25 million in 1815, marking a 163% increase

This led to a rapid rise in consumer prices and growing concerns about political stability among those in power. As a result, the price of gold in the UK also rose sharply, reflecting the public’s confidence in physical gold and investing in gold. Although its value was officially fixed at £4.25 per troy ounce by Sir Isaac Newton, its price in free markets increased by more than 20%.

To address the situation, the authorities initiated one of the most famous investigations in monetary history—the Gold Committee. The Inquiry Paper, published in 1810, recommended a return to the gold standard. Over the years, the Bank of England itself repeatedly urged Parliament to reinstate the gold standard.

The Second Life of the Gold British Sovereign

At the beginning of the 19th century, the most popular gold coin in the British Empire was the guinea. When it was first introduced two centuries earlier, it was intended to equal one pound or 20 silver shillings. However, as the value of gold rose relative to silver, the guinea’s value sometimes increased to as much as 30 shillings. Guineas were minted from 8.3 grams of 22-carat gold, containing 7.7 grams of pure gold.

Such fluctuations were unpopular with the public. Authorities noted that:

“There is a general desire among the populace for gold 20 and 10 shilling coins in place of the guineas, half guineas, and silver seven shillings”

In response, in 1816, the authorities set about creating a new standard where one pound equaled 20 shillings. However, this new gold sovereign coin needed to be more than just a piece of gold. It had to symbolize Great Britain’s power as the victor of the Napoleonic Wars (1804-1815) and as the empire on which the sun never sets. Looking back to their roots, they found the most fitting way to demonstrate this through a single coin: the British sovereign.

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Given the vast reach of the British Empire, the sovereign was minted in various locations around the world. The mint marks, indicating the producing mint, can be found in three places on the coin:

1. Under the bust of the ruler
2. On the ground under the hoof of St. George’s horse
3. Under the laurel wreaths when the coat of arms is depicted

The exception is coins minted in London, which do not bear any mint mark.

Table 1: Sovereigns Origins

The Original British Sovereign of Henry VII

After the War of the Roses, Henry VII ascended the English throne as the victor. Among his goals were uniting the country and strengthening its international position. Fourteen years after his coronation, in 1499, he created a gold coin to symbolise both achievements – the sovereign.

The coin’s name derives from the ruler himself, depicted on the obverse side, seated on the throne with the symbols of power – crown and scepter. The reverse side features the coat of arms surrounded by the united English rose. The sovereign was remarkable for its time, boasting a diameter of over 4 cm, a weight of 15.5 grams of gold, and an exceptionally high purity of .958 or 23 carats. Furthermore, the original sovereign was groundbreaking in British monetary history because it was:

• The first one-pound coin
• The largest gold coin issued in England at the time
• The first coin to realistically depict the ruler
• The highest purity coin

A pound may not sound like a significant amount today, but five centuries ago, it represented three months’ wages for a craftsman or a year’s wages for a servant. Many English people at the time likely never saw a sovereign in person. However, it was a symbol of royal power, circulating among the wealthy, rulers, and merchants, and through them, throughout Europe.

It became such an emblem of stability and monarchy that, although Henry VIII reduced its purity to 22 carat, establishing a standard that remains in the English-speaking world, it was minted by all rulers for the next two centuries before being permanently replaced by the guinea in the 17th century.

The Birth of the Sovereign Known Today

This is why, in the 19th century, the authorities revisited the past and reinstated the sovereign as a symbol of stability and achievement. Like its predecessors, the new sovereign maintained a purity of 22 carats but contained 7.31 grams of pure gold. This made it smaller than both the original sovereign and the guinea, aligning its value to one pound or 20 shillings.

Table 2: Characteristics of a British Sovereign

The reintroduction of the British sovereign marked the beginning of a significant monetary initiative – the Great Coinage.

The creation of the gold sovereign not only marked a new chapter in England’s financial history but also gave birth to the most produced and popular British coin, which continues to be minted to this day without altering its standards. In fact, it is produced according to the most precise standards in the world.

According to the Royal Mint, its pure gold content is guaranteed to five decimal places. Over the next two centuries, the sovereign would be used globally and witness the greatest expansion in imperial history, with the gold standard ensuring its durability and sustainability.

Gold British Sovereign Design

The first sovereign debuted in 1817, featuring the profile of George III facing right. It is a tradition for the monarchs on these coins to be depicted in profile, with their faces turned in the opposite direction to that of their predecessor. Therefore, the current King Charles III is depicted with his profile facing left.

The reverse side of the first sovereign showcases a scene of St. George and the dragon, created by the sculptor Benedetto Pistrucci

When he presented his design to the Royal Mint in 1816, it was so intricate that the mint’s craftsmen were unable to produce the steel dies needed to strike the coins. As a result, Pistrucci made the dies himself. In his depiction, St. George is holding only part of a spear, presumably broken in the heat of battle. Four years later, the spear was replaced by a short sword, which has remained unchanged since.

Aside from this alteration, the image has undergone few significant changes. One of these was the removal of the tufts of hair flowing behind St. George’s helmet. These tufts later reappeared but were not consistently present. For instance, under Elizabeth II, the hair appeared on coins minted until 2009. After that, the Royal Mint reverted to the late 19th-century design, where the hair is no longer visible.

The image of St. George has been replaced only twice. At the beginning of the 20th century, Timothy Noad developed a new design, portraying St. George in medieval armour and helmet, swinging his sword against the dragon. This design was used only in 2005. Seven years later, a unique design was introduced again, depicting St. George spearing the dragon, to commemorate the Diamond Jubilee of Elizabeth II. Only 750,000 pieces of this special edition were produced.

The Master Coin of the World: The British Sovereign Through History

The gold sovereign was legal tender between 1817 and 1914. During this period, over one billion coins of various denominations were minted. By comparison, “only” about 600 million French francs were produced, making the sovereign one of the most common means of payment in continental Europe.

At the height of the British Empire, the sovereign was used as a means of payment in more than 30 countries, covering a significant portion of the world’s surface at that time.

The End of the Sovereign and The World Wars

Paradoxically, the use of the gold sovereign was discontinued for the exact opposite reason it was created. After ensuring the country’s financial stability for a century, the sovereign ceased to be legal tender with Britain’s entry into World War I on August 4, 1914. The populace, alarmed by the conflict, began hoarding physical gold, causing the Bank of England’s reserves to plummet by 60% in just three days.

To address this, the government introduced notes with denominations of one pound and 10 shillings, effectively ending the use of gold coins in everyday transactions. During the Great War, the Bank of England successfully withdrew from circulation all gold coins with a nominal value exceeding 100 million pounds.

However, the sovereign continued to be produced until 1925 in London (with a hiatus after 1917) and until 1932 in the former colonies. The primary reason for this continued production was to use them as reserves by the Bank of England and for payments on British foreign debt.

Two limited editions were produced in the late 1930s and 1940s. The second edition featured King George VI (Elizabeth II’s father) but was made using dies from 1925. The coins from the 1930s, which have the most limited mintage in history, have become record-setters among collectors.

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The Most Expensive British Gold Coin in History

Edward VIII was on the throne for less than a year, from January 20 to December 11, 1936, making his the shortest reign in British history. He was the first ruler to abdicate and also the first to insist on being depicted in the left profile on coins, as he preferred this side, like his predecessor. During his brief reign, the Royal Mint managed to produce only a very small number of coins bearing his image, none of which entered circulation.

After his abdication, these coins were collected, placed in a box, and hidden in the office of the deputy director of an institution. They remained there until the 1970s, when most became part of the Mint Museum’s collection. However, it appears that some coins left the museum.

In 2020, a sovereign bearing Edward VIII’s image was sold to a private collector for £1 million, making it the most expensive British coin in history at that time. However, just a year later, another Edward VIII sovereign with a face value of £5 sold for £1.65 million, setting a new record.

The Restoration of the Sovereign under Elizabeth II

With the accession of Elizabeth II to the British throne in 1952, the Royal Mint prepared the first new series of British sovereigns a year later. Their circulation was extremely limited, and today these coins are kept in the Royal Collection, the British Museum, and the Royal Mint. Serial production began four years later.

The Queen not only reinstated this iconic coin but also became the monarch with the most portraits on the sovereign—five in total over seven decades. During this period, over 80 million pieces were produced.

There were many reasons for the revival of this legendary coin. The halt in production during the First World War created a vacuum in the markets, leading to increased demand for gold. As a result, some countries produced near replicas of the sovereign, such as the Saudi Guinea (7.3217 g of pure gold, fineness .917), minted between 1950 and 1957.

Additionally, there was a need to combat the proliferation of counterfeits that had begun to flood the markets after the Great War, particularly those produced in large quantities in Italy and Syria.