Wish me Happy Birthday Motherfuckers!!!!
The pound was abbreviated "L" for "Libra" (latin for a pound of silver). The shilling was abbreviated "s" for "solidus", and the penny was abbreviated "d" for "denarius".
After the reform, there were 100 (new) pence to a pound, but visitors were quite confused, because the old coins remained legal tender. For example, the old sixpence coin was now 2 1/2 (new) pence; to avoid confusion, the new pence were abbreviated "p" (for "pence"). As old coins wore out, new coins were minted in the same shape but imprinted with the decimal value.
How could a system as complicated as the 1/20/12 ratios have developed ? One source claims that the three units originally were unrelated.
There was a unit of currency called the shilling. It was used by big business and worth quite a bit (about a month's wages). Its value went up and down as the medium of exchage -- a month's work -- became rare or plentiful -- high employment or low employment.
There was another unit of currency called the penny. It was the general medium of exchange for a bulk item (baker's dozen of loaves, a month's rent, travel from Oxford to London). It was divided into quarters so you could buy a single loaf or a jug of milk.
Another unit was used by huge business: the banks, shipbuilders, those who dealt in metals or in entire shiploads of goods. It was equivalent to the cost of a pound of silver.
There were also groats and sovereigns. I'm not sure about them.
These all existed independently. If you were the kind of person who dealt in pounds, there was never any need for you to encounter a penny. If you paid rent of a shilling a month for your house, you could never thing of seeing a whole pound. The different units of currency had constantly-shifting exchange rates depending on demand-and-suppply. If three trading ships came in at the same month all laden with goods, the value of the pound would go up with respect to the shilling and penny.
Eventually there was so much interplay between the different currencies that it became necessary to fix the exchange rates to stop a rich man keeping all his wealth in pennies because he thought that the pound was going to go down. At about that time, a pound was worth about twenty shillings and a shilling was worth about twelve pennies, so that's how they fixed it.
The disparate systems did not bother ordinary people. No need to know what a shilling was until you were old enough to pay rent. No need to know what a pound was unless you were a clerk, in which case you were trained. More recently (i.e. when I went to school) it was a standard part of early schooling.
I really don't believe any of this, but it is an interesting theory.
Back to the facts. Certain items were traditionally billed in Guineas. A guinea is one pound and a shilling. I have heard it claimed that this originated in real estate transactions, where the pound went to the seller, while the shilling was the lawyer's commission for doing the paperwork.