On Wizarding Money

[Jordan Abel]

No: HPFGUIDX 167634

(I wrote this earlier in the week but i'd hit my 5 posts and i didn't
want to go over by making a new thread)

I have a theory on why they seem to be in crazy subdivisions (that is,
the fact that there are 17 sickles to a galleon, 29 knuts to a sickle,
for a total of 493 - which isn't divisible by, well, pretty much
anything except 17 and 29.)

Now, the reason that JKR chose these is obvious - they're crazy
numbers, it's something of a parody of the old british system, etc.
But how would these numbers come about in the WW itself?

Well, let's look at one particular real-world example of a "crazy
number" - in fact, let's pick a british example. Now, the pre-decimal
was actually pretty reasonable generally. 12 and 20 make 240, which is
divisible by pretty much everything. But what of the Guinea? That's 21
shillings, not 20. Quite an odd number to be using. But consider the
reason the Guinea is worth 21 shillings - the historical coin of that
name contained slightly more gold than a sovereign.

Furthermore, silver and gold coins have historically floated in value
as the relative amount of each metal in the economy shifts. So, while
clearly no sane wizard or goblin would devise a system where the money
always exchanges at one to 17 or 29 or 493, there's a perfectly
reasonable explanation why the exchange rates are as shown in 1991.
Perhaps they are adjusted every 10 years, or every year, to reflect
the market value of the metals. Maybe the knut is pegged to a 'basket'
of each, resulting in funny values when exchanged into only one. For
example, four galleons and one sickle are worth almost exactly 2000
knuts. Maybe it's not pegged at all, but similarly floats with the
value of whatever bronze alloy it's made from.

Perhaps the values change on the day and most items are only
officially priced in one of the three coins. With the three coins
being effectively three different systems, the "17 sickles an ounce"
price, while corrected to a galleon in later editions, would not
strictly be an error. Also, such a system would explain Ron's remark
about never having seen a galleon before - perhaps the Weasleys mostly
keep their money as sickles and knuts for whatever reason - we don't
know that he's never seen seventeen or fifty or eighty sickles in one
place.