Every currency system must be based on a standard unit of value. The English unit is the pound, which consists of a definite quantity of gold (123.27447 grs. standard fineness), while the French, or decimal unit, is the franc (composed of 5 grms. of silver 9/10ths fine).
Money is either standard or token; the first is of the same value as the metal it is made of, while the latter is rated at a nominal value higher. The silver and copper coins of England are merely tokens, being about 30 per cent, below their nominal value. Token coins are only admissible for small payments.
In England forty shillings is the maximum legal tender for silver, and twelve pence in copper. Standard coinage is always legal tender to any amount; but gold coins before the reign of Queen Victoria are not legal tender. Foreign coins are not legal tender now in the United Kingdom.
Bank of England notes, being always convertible into gold, are made by law a legal tender, and may therefore be classed as free currency.
In commercial practice prices are quoted sometimes also in guineas; a guinea representing the sum of twenty-one shillings. No coin of such value, however, actually exists in the present currency of the United Kingdom.
The paper currency of England is chiefly represented by notes issued by the Bank of England, and always convertible into coined money, which are not only a legal tender by law, but generally and willingly received by everybody on account of the nigh credit of the establishment from which they are issued.
There are other banks in the kingdom also empowered by law to issue convertible banknotes; such notes, however, are not so readily and everywhere accepted as money.