The gold standard was adopted in 1816, and since that time the 
words "pound sterling” have heen used to denote the weight of a 
sovereign, that is to say \'‘2H.27 grains of gold of 22 carat fineness 
(or .91H), which pound is also divided into 240 pence. The words 
pound sterling therefore, as now used, have no relation to any 
pound of gold, nor to the old sterling fineness, but are simply the 
old familiar terms descriptive of the former currency which have 
been transferred to the new gold currency. In the course of time 
however, the word sterling has come to mean "the standard fine- 
ness as fixed by law,” and in that sense is justly applicable to the 
gold sovereign. 
Until 1816, silver was the legal standard of value, and the 
value of all other things, gold included, was reckoned in it. From 
Stuart times onwards, however, gold was much more used than 
formerly, and because of its convenience for making large pay- 
ments, became of principal importance in public estimation. It 
thus arose, that although silver was the nominal standard, gold 
from its usefulness became the more important metal. 
When however, the rating of gold in sterling was too low, gold 
coins were bought up and exported as bullion to the countries where 
a better price could be obtained. 
The Government would then raise the rating, and back came 
the gold coins, but. unless the new rating very accurately corres- 
ponded with the market values of the metals, away would go the 
silver ones. For about two centuries difficulties due to the im- 
possibility of keeping both the gold and silver coins in circulation 
at the same time were hardly ever absent. The currency at last 
got into this condition: — 
There was a fair supply of gold coins, but the silver coins 
consisted almost entirely of worn, clipped and debased pieces, so 
bad that it would not pay anyone to sell them as metal. Reflection 
wdll show' that that state of affairs was, in its principle, very simi- 
lar to that of the currency we now have in use. Gold, although not 
nominally the sole standard, was in fact treated as such, and the 
silver coins, nominally standard coins of intrinsic value, had in 
point of fact become more or less worthless tokens passing for 
recognised fractions of the gold coins. The principle of the pre- 
sent currency : a gold standard with token sub.sidiary pieces, w’as 
therefore in existence, although the public did not realise the im- 
port of it. At last a man arose who saw the meaning of the situa- 
tion, and the reason for the state of currency chaos w*hich had 
lasted for so long. That man was Lord Liverpool. In 1805 he 
addressed a letter to King George TIL in which he pointed out the 
nature of the disease and prescribed the remedy. This letter, 
famous to all students of currency, made it clear that it was im- 
possible to attempt to measure commodities in two things at the 
same time. That there must be one standard only, and that if for 
