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MARTINS
BANK AND DECIMALISATION |
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Jumping the gun?
Counting up, counting down… Although Martins Bank sadly does not survive to
oversee the conversion of its accounts to the new decimal currency, it is
still very much at the forefront of the planning and decision making that
will give us the 100p Pound we still have today. This is because Ron Hindle, Manager of the
Bank’s Organisation Research and Development Department is chair of the
committee charged with sorting the whole thing out. Ron is
already the brain behind Martins’ groundbreaking computer development, and
leaves much of the system we still use for clearing cheques as his
legacy. In 1967, as Chair of the
British Banks Decimalisation Study Group he travels to Australia and New
Zealand to find out how these countries have coped with the adoption of
decimal currency, and, more importantly HOW we in Britain should do the same.
Ron Hindle
(Right) and his fellow Group members pose for the Wellington Evening Post in
July 1967. Image ©
Wellington Evening Post / Martins Bank Archive Collection - Ron Hindle Estate
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©
1967 Wanganui Herald, Wellington Evening Post, The
West Australian and Ron Hindle Estate |
The Group’s visit down-under attracts a considerable amount of interest
from the press, for once able to bask in the knowledge that they are ahead of
the UK in decimalisation by a number of Years. In Britain, decimalisation has already been
on the cards since the early 1960s.
Following successful decimalisation schemes in other countries,
the British Government sets up the Committee of the
Inquiry on Decimal Currency (Halsbury Committee) in 1961, which
reports in 1963.
There follows much discussion
about how to achieve a decimalisation, including halving the value of the
pound, before the system we know today
is finally adopted. Martins is in the
final throes of takeover by Barclays when in October 1969 the ten shilling
note is replaced by the 50 pence coin.
The British Pound remains intact after
decimalisation, unlike in Australia and New Zealand, where the value is
halved to create the Dollar. Between 1928 and 1957, long before
decimalisation, Martins Bank issues its own £1 notes on the Isle of Man. Altogether nine non-Manx banks are
permitted to issue £1 notes on the island between 1882 and 1961. Tynwald then decides that ALL future Isle
of Man banknotes can only be issued by them. |
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x Ten-Bob Notes – still missed today |
x Martins Manx
Pound |
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Images © Martins
Bank Archive Collections
After touring New Zealand and
Australia in July 1967, Ron writes the following article in the staff
magazine in which he looks at the merits of having a decimal currency, and
how this has already taken place on the other side of the world. He also speculates on the size and shape of
Britain’s new coins, noting wryly that a coin with edges will surely wreak
havoc in a cloth pocket! Little does
he know how right he will be…
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Whatever savings were anticipated are lost as a result. In New
Zealand a coin of similar value was issued and in the first few days it
seemed to be acceptable. Will this be so a year from now? The reason given in Australia is that the
50c coin is too easily mistaken for a 20c coin or older 2s. piece. Though
different in size, in the metal used and in design, the public does not want
it. New Zealand gave their 50c coin a distinctive feature—the milling round the edge is broken by four smooth segments.
Is this the secret of success ? We need to know, if Britain is to make a
success of a 50 new penny coin (10s. in the present money). How about a
different shape? Imagine the havoc
that a square coin (even with rounded corners) will cause in a cloth pocket. |
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Australian Decimalisation 1966. The one and two cent coins are
dropped in 1990, being of little more than nuisance value. |
“Tabloid education
is fashionable today - people learn through the medium
of comic strips. There has to be a cartoon character. So 'Dollar Bill' was born” |
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‘Tender high’ The Australians expounded an interesting theory - that men pick out coins from their pocket largely by the
sense of touch while women take them from their purses mainly by appearance.
The coins of smallest value both in Australia and New Zealand are worth 1
cent and 2 cents. They avoided 4 cents by opting for a major unit equal to
10s. in the old currency. Quite rightly they preferred coins smaller than the
clumsy penny. In New Zealand no secret was made of the fact that the
operation of decimalisation was being covered by savings arising from the
reduced metallic content of the low value coins. But are these coins too small?
In practice the banks find that the variations in weight of coins of
the same value are such that checking values of bags by weight is a much more
risky procedure than it was with pennies - and that is so now,
when all the coins are new! It seems that tolerance in weight is not in
proportion to the stated weights of the coin but it increases proportionately
with larger coins. Tabloid education is fashionable today - people learn through the medium of comic strips. There has to
be a cartoon character. So 'Dollar Bill' was born. There had to be songs and
rhymes too. What about nursery rhymes ? Could 'Sing a song of sixpence'
become 'Sing a song of five cents'? 'Tender high' was the refrain on D.C. (decimal changeover) Day.
What did it mean? An official conversion table had been published and
appeared on the sides of pens and pencils, inside purses and on every gimmick
that could be devised. But it was seemingly only for bankers and such elite. You must tender high - as high as the next multiple of 5 cents (6d.) above what you
want to pay. Then you will get cents in change. Imagine how this went on. A man gets on a bus and asks for a
7-cent ticket. His pencil tells him that this is equivalent to 8d. which he
offers to the driver (one-man buses always). No, says the driver, a shilling
please and I will give you 3 cents change. The newsvendor sells papers
previously 4d. and now priced at 4 cents. But 4 cents equals 5d., the pencil
says. The passer-by offers 4d. - just trying it on,
or maybe forgetting the changeover. No, says the newsvendor. Remembering the
pencil the buyer offers 5d. No, says the newsvendor, I want 6d. so that I can
give you 1 cent change. The argument starts. The paper was only 4d. last week
- and why should I not get it now for 5d. ? The newsvendor gives in and takes
the 5d. - and makes an additional 1 cent!
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New Zealand old AND new – on the SAME
coin! Interestingly the first New Zealand
decimal $1 coin displays its value in both decimal AND pre-decimal denominations
to demonstrate that one new dollar is equal to ten old shillings. Image © Reserve Bank of New Zealand - http://www.rbnz.govt.nz/ |
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Progressive changeover A statistical discovery was that whereas bank notes come and go
in the banking system coins stay put. A branch tends to hold a basic reserve
stock of coins which is rarely touched. This helped in the withdrawal of the
old coins after the changeover. On the changeover day all stocks of the old
coin held by the branches were 'frozen', not to be issued except in case of
emergency, and were withdrawn later without the complication of sorting new
coin from old. If the new coins are to be issued in advance of changeover in
this country, as is now suggested, it will not be possible to carry out such
a clean withdrawal of old currency after conversion. Conversion cannot be done overnight. In Australia, for instance,
the operation of dual currency lasted for 18 months, a progressive
changeover, zone by zone, taking place, largely determined by the question of
machine conversion. During this time shops were advised to work in the
currency that their machinery was made for. Thus the 'tender high' philosophy
had to operate for some time. This was not fully recognised by some New
Zealand bank managers who omitted to keep some £.s.d. currency for issue to those of their customers who were
still dealing in £.s.d. This sort of thing complicates the task of the
cashier. During the dual currency period small items (groceries and the
like) are commonly marked in both currencies. Imagine the fun in this country
if we persist in calling the minor unit a penny (or even a new penny), the
new penny being worth 2.4 old pennies. The actual price tickets should be
clear enough as a different letter will be used for the two pennies ('d' for
old and 'p' for new). In conversation, however, it will not be so easy.
Imagine the grocer saying 'Mrs Smith, sugar is fourpence a pound today'. 'That's
cheap' says Mrs Smith, 'I'll take 10 Ib. before it goes up. Here is 3s. 4d.'
'Oh no, Mrs Smith that comes to 40 pence. If you want to pay in the old
currency it will be 8s.' Imagine, too, the tricks that the unscrupulous
trader might be up to.
Ups and downs Britain, basing its new currency on the £, will be spared the problems that arise at the top end of the
scale due to a change in major unit. The Australian and New Zealand new
dollar is equivalent to 10s. Houses there sound cheaper if still advertised
in £'s. But the best racket arises with motor cars. These are still often
advertised in £'s, but your trade-in is quoted in dollars. 'Yes sir, you can
have this magnificent car for £1,000 and we will give you an allowance of 400
dollars for your old model.' The customers pays up 1,600 dollars and then
realises that his trade-in allowance was only £200!
Banks generally reckon to balance their books but currency conversion beats
them. Perhaps for the first time they have to instruct their branches not to
balance —or at least they have
to tell them what to do with inevitable differences. This arises from the
fact that old pence cannot be converted exactly into new pence; some figures
are rounded up and some are rounded down, and only by an arithmetic freak
will the 'ups' balance the 'downs'. The more the amounts the less will be the
difference, always assuming that the nimble-fingered machinist makes no
mistakes and anyway, by then, every branch will be 'computerised' so maybe
they won't care much. Some shocks may well be coming to managers. Quite likely the
bank's books will be closed to customers for a while to permit cheques in the
pipeline to find their way into the accounts. Then for the first time,
managers will really know how far a customer is overdrawing on his account!
These are the sort of practical things that arise in decimalising the
currency. The basic principle is simple enough, but there will be a multitude
of little situations to deal with and it will not only call for training and
knowledge on the part of the bank staffs who will bear the brunt, but for
quite a bit of tact and understanding.
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