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Time and Money
Railway Time and GMT
Time measurement is necessary for navigation, prior to satellite systems sailors navigated by measuring the time that the sun reached local noon, comparing this with the time at Greenwich allowed them to calculate how far round the earth they were. As a result there was a lot of interest in clocks and with the development of pendulum and spring driven clocks a fair degree of accuracy could be established. This came at a time when the factory system was becoming common, under which time measurement was an important aspect of management. Everyone used their local time, that is 'noon' was when the sun was at its highest in the sky. With no electric communications and no high speed travel the small differences in local time did not affect anyone.
With the linking up of the various lines in the later 1830's time tables were introduced to control the traffic and hopefully avoid collisions. Obviously everyone had to use the same standard time and the Liverpool to Manchester Railway applied to the Government to establish a standard time across the country. The government felt that railways were a passing fad, the Prime Minister at the time, the Duke of Wellington, was of the opinion that they were a 'bad thing' as they would encourage poor people to move about the country. By the 1840s the increasing interconnection of the early railways was starting to cause real problems with time tables and 'local time'. The business community in Manchester took the matter into their own hands and set a standard time for the railway system. They decided that the highly accurate pendulum clock at the Greenwich Observatory would be the best source for time signals and established a telegraphic link to a specially built clock mounted in a large case in the Manchester town hall. This clock is now on display at the Manchester Science Museum, the mechanism was not automatic, a needle mounted in a separate dial was operated by a signal from Greenwich and a local official made a note of the error. In 1852 Greenwich time was adopted by several railways across the country, by 1855 it was in common use. The government then decided that this was a good idea and officially endorsed the use of Greenwich time as a national standard for railway time tables and most people called it 'Railway Time' up to about the 1860's after which the term GMT became increasingly common. Villages still kept their own local time however and several public clocks were fitted with two sets of hands, one for local time the other for 'railway time'. These clocks were still seen in use into the 1930s.
As business and industry were closely linked to the railways 'railway time' became more important than local time and in 1880 the Time Act officially set the standard British time to GMT right across the country. In 1884 several other countries decided to adopt GMT as an international standard, defining their own national time as being ahead or behind GMT. As a result 'standard time zones' appeared, dividing the world into twenty-four time zones. For convenience these were allocated letters of the alphabet, GMT being Z or Zulu (the letters I and O were omitted). A few countries have a standard time which differs from GMT by an odd half hour, one example being India which keeps GMT plus five hours and thirty minutes. This has the curious side effect that if you turn an analogue watch set to British time upside down you switch between GMT and Indian Standard Time.
The United States is so wide the west coast is four hours behind the east coast but the cross country railway services were however all long-haul and operated independently of the local services, so their time tables specified dates rather than hours. It was after the First World War before they worked out where they were going to draw the time zone lines across America.
In Britain Daylight Savings Time was introduced in 1916 because of the need to save power on street lighting during the war, it was made permanent in 1926 and has since been adopted by many Northern Countries.
In 1964 BR adopted the 24 hour clock for timetables (something the French had been using for many years), annoying the older generation, who's watches only went up to 12. As an experiment the UK adopted Central European Time in 1968, bringing the country's working day in line with Europe. This was not a success however, partly because in Britain the working day started at 9 o'clock (a practice adopted during the Second World War to save money on lighting) whereas in Europe most people start work at 8 o'clock. After complaints about children going to school in the dark the experiment ended in 1971. Another hold-over from the war in Britain was the idea of having the admin staff start the day later than the people doing productive work, in most other countries the admin staff arrive early in order to supervise the work.
The French tried to introduce a new standard time based on Paris mean time, the Americans wanted everything from time to the lines of longitude and latitude to be based on Washington DC but by this time the solutions based on Greenwich were so well established no one took either idea seriously. GMT as defined is not perfectly accurate and in the 1940s the 'atomic clock' was developed in America, allowing incredible accuracy to be defined (an accuracy of typically a second every few tens of million of years). The first atomic clock was the ammonia clock, invented at the US National Bureau of Standards in 1948 which worked by measuring the vibration in nitrogen atom in an ammonia molecule. Later came the caesium clock which gave us a very precise definition of one second as being 9,192,631,770 vibrations of the atom. The most accurate clock in the 1990s was the 'hydrogen maser clock', a maser (Microwave Amplification by Stimulated Emmission of Radiation) is like a laser, energy is pumped in and gets absorbed by atoms, in this case hydrogen atoms, these then 'decay' back to their normal state, giving up the extra energy. The energy is released at a very precise frequency (determined by the atoms used) and the clock of this type at the US Naval Research Laboratory, Washington, DC, is regarded as the most accurate clock on earth.
The atomic clock introduced a 'new improved' version of GMT with a small correction for the yearly variations in the Earth's orbit which they called Universal Time or UT. However atomic clocks are themselves subject to tiny variations and the final solution adopted was to take readings from thirty of the worlds clocks and produce something called Co-ordinate Universal Time, the French acronym for which is UT. All this information is collated in a Chateau near Paris but the results take about two weeks to publish. UT is today the internationally agreed standard time but the Earth does not quite run to time (it is slowing down in part due to the energy absorbed by the tides caused by the gravitational pull of the moon) so 'leap seconds' are introduced every now and then to correct UT. These leap seconds are called into play by the International Earth Rotation Service in Paris. The 'time zones' based on GMT remain in use, UT differs from GMT by a trivial amount and Britain remains as zone Z.
All of which may seem arcane but it was the super accurate time measurement brought by atomic clocks that allowed the Doppler shift of signals from satellites to be measured. No one was very interested at first but a team of engineers in America decided to demonstrate the principle and managed to get permission to launch a satellite using an Atlas ICBM booster. The second stage of the rocket failed but they were still able to get the proof they needed and the American military woke up to the potential of satellite navigation systems. In the event the technology was also made available for civilian use by ships, leading one US military type to comment that 'This kind of technology is too important to be allowed into the hands of scientists'. The early 'transit' sat-nave system came on line in the later 1970s. A series of satellites in polar orbit gave periodic position fixes and, although incredibly useful, Transit was not exactly foolproof (one American ship was heading into the Mediterranean Sea with the officer of the watch busy doing chart corrections to the ships paper charts, he was navigating by plotting the periodic sat fixes, not looking out of the windows, and managed to run into Gibraltar). To provide continual position fixes the GPS satellite system was developed, using a lot more satellites, but the US military insisted that errors were introduced so it could not be used by other military forces. The solution (dreamt up by Decca and widely implemented in the early 1990s) was to add a signal from a fixed local station applying a correction and bringing plain GPS to near military precision. This is technically called 'differential GPS' but only engineers use the term. This corrected GPS signal is sufficiently accurate to be used by straddle carriers stacking containers in railway yards and docks and by the early 21st century it spawned a number of low cost in-car navigation systems.
Outline History of Money & Finance
The Industrial Revolution brought with it the evolution of what has become the basic financial structure of Western society, including the introduction of money in the modern sense of a simple token backed by confidence in society rather than lumps of precious metal such as gold or silver.
Coins had been invented in about 2000 BC (nearly four thousand years before the railways) and for hundreds of years the British had been using 'sterling silver' (made from metal which is at least 92.5% pure) as the medium of exchange. This silver was formed at an official mint into coins of set weight and authorised by the Crown as 'Legal Tender' (legal tender has to be accepted as payment by law). Technically this is Sterling Silver and the term Sterling remained the standard name for British currency until the 1990s, after which it has steadily fallen from favour being replaced by 'the pound'.
During the eighteenth century there was a shift toward using gold as the standard coined money in Britain. The 'Guinea' was a gold coin introduced in 1663, it took it's name from the Guinea Coast of West Africa where the gold had been mined. The coin soon became a commonly used currency and in 1717, when Sir Issac Newton was Master of the Mint, the coins value was set at twenty one shillings.
In 1790 Matthew Boulton (1728-1809) the business partner of James Watt, patented a steam-powered coin press and went on to establish a new copper coinage for Great Britain which was introduced in 1797, initially for low value coins (farthing, half penny and penny). One odd point is that the lady who modelled for the figure of Britannia on the reverse side of British coins was a famous Scottish beauty in the court of King Charles II in the 1660's.
Treasury officials still favoured silver but ordinary people opted for gold and this was eventually recognised by the government which passed a series of Acts restricting the use of silver coin as legal tender. By the early Nineteenth Century silver coins were only Legal Tender for values of up to forty shillings. You could take any British coins to the Bank of England (still at the time a privately owned bank) and obtain the required amount of gold in exchange, that is the currency was 'backed' by a 'gold standard'. The history of gold standards is complex, Sir Issac Newton set up a fixed rate of exchange between silver and gold in 1717 and Britain has been on and off the gold standard at various times since Napoleonic times (although in practice most international deals were paid for with silver). With the unification of Germany following the Franco Prussian War in 1870 the German Reichmark was established as a fully convertible currency (one backed by gold reserves) and this in turn lead to a gradual adoption of a gold standard for international trade, however a series of wars followed, all of which required more expenditure than the countries had gold reserves to cover and at various times countries joined or left the standard.
The Napoleonic Wars began in earnest in 1799 and finally ended with the battle of Waterloo in 1815. One of the first effects of this was the development of 'paper money' (about 1797) and a move away from cash payments for goods and services .
The Bank Note was originally developed in Greece about 400 years before Christ, you handed your money to one bank who gave you a letter which you could take with you to another town where another bank would give you the money in exchange for the letter. This avoided the need to carry money about, always a dangerous proposition even today. In Britain the bank note first appeared amongst the goldsmith-bankers of London after the Restoration of Charles II as monarch in 1660. These were promissory notes, backed by silver or gold deposits held by the bank, and confined to high values. By the early eighteenth century the Bank of England was issuing notes in multiples of £5 or £10 but the smallest note issued was for £10 until 1793 when the £5 note appeared. The paper £1 and 10/- (ten shilling, 50p in today's money) notes only appeared in 1928.
Bank notes, issued by various banks around the country, had become an important medium of exchange by the late eighteenth century. They were all different and there was no national system supporting their use but they were backed by gold and silver deposits held by the banks and allowed the development of a credit structure which would in turn allow the investment in capital intensive industry.
By the early nineteenth century other banks were using Bank of England notes in place of their own but this activity was concentrated in London. Elsewhere paper exchanges took other forms, notably the Bill of Exchange, which became important for northern wool traders dealing with London merchants. This was a note which conferred on the holder the rights to the money returned by the sale of a specified quantity of goods. These bills of exchange had evolved for international trade but in the eighteenth century inland trading was greatly facilitated by their use. They were accepted as being of value and could be traded until they fell due and the money was paid. These notes are still in use today, their trading constitutes what is called the 'futures' market in the stock exchange. Stocks and shares have been around for quite a while, the Stock Exchange was set up in 1568 (it was originally called the Royal Exchange, the name changed in 1773).
One major change in 1855 was the introduction of limited liability for company officials. Limited liability means they can only be sued for their stake in the company, prior to this all an individuals money and assets could be confiscated if the company failed. This Act meant that companies might have the word Limited or Ltd. appended to their name. Limited liability was already common practice in Europe and America.
In 1914, faced with a costly war, the British government abandoned the gold standard (you could no longer turn up at the Bank of England and demand gold to the value stated on the bank note) and although they subsequently re-instated in 1925 (by Winston Churchill, somewhat reluctantly) it was finally abandoned in 1931 in the face of the Great Depression. The use of Sterling, backed by confidence in Britain, proved successful however, partly as it was accepted by the various countries in the Empire. A Sterling Preference System, under which various governments offered reduced fees for services paid for in Sterling helped support this approach and Sterling (although not backed by gold) was an accepted international trading standard into the 1960s. Sterling Preference remained in use in some countries (notably India) into the early 1970s but in 1971 America left the gold standard and since then the idea of such an international standard has fallen from favour (amid considerable debate regarding its possible benefits). Oddly enough in the USA the Great Depression coupled with attempts to maintain a gold standard lead to a law prohibiting American citizens from owning gold, although as jewelry and private coin collections were exempt from this ban it is not clear to me how it was supposed to work.
It was about the time of the First World War that cheque books began to become commonplace. The correct term is 'drafts', the cheque (or check) was originally the counterfoil on a 'bankers draft' (the direct descendent of the ancient Greek system described above) and the word migrated over to the draft itself. Cheques became a common way of making payment in Britain and America and they were relatively common in many English speaking countries but they only caught on in Europe after the Second World War.
The acceptance of 'paper money' is by no means world wide, even today the smugglers and traders of the Arabian Gulf and Indian Ocean generally prefer gold in the form of Bombay Sovereigns (gold coins still produced in India) or 'Tola' bars (small bars of hallmarked gold, common in Arabian countries) as payment for their goods and services.