Transcript of Module 17 – The History of Australian Money

When colonists (1) first arrived in Australia, establishing a stable (2) and acceptable (3) currency was obviously far from the top of the important to-do list (4) of the colonists here.

The First Fleet arrived on Australian shores with only the currency it had onboard (5) the ships, which included about 300 pounds (6) of English coinage (7). And I don’t know if that’s pounds as in a pound of, you know, unit currency from England, or pound as in weight, which is… what, 2.2 pounds is a kilogram. So, I don’t know which one of those it is.

This money was held by (8) Captain Phillip, and the only other money that was there on the ship and that made it to the colony (9) was a bunch of (10) other foreign currencies that had been brought over in the pockets (11) and purses (12) of officers (13), sailors (14), and passengers (15), a.k.a. convicts (16) or British slaves. So, these other currencies included English guineas, shillings, and pence, Dutch guilders, Indian rupees—that was surprising—and Spanish reales.

So, the fact that numerous different currencies were being used simultaneously (17) was really confusing for early colonists. The value of these currencies often related to their metal content, but arguments, disputes, and disagreements often arose, often took place (18), when people didn’t agree on (19) the value of these different currencies.

The other issue (20) with currency was the fact that there was a lack of (21) these coins and they were often taken out of (22) the colony by trading ships (23), ships that came to the colony and then left after selling stuff. And this is where promissory notes (24) came into play.

Promissory notes were signed documents with a written promise that a person would owe (25) the holder (26) of that promissory note a certain amount of money. So, effectively, an IOU (27), right? I owe you some money. We often call those IOUs.

So, colonists tried paying traders (28) with these notes that promised traders would be able to exchange (29) this for cash payment when they arrived in England. However, as you would imagine (30), many traders often refused (31) and wanted cash in exchange for the goods (32) that they were selling on their journey.

So, promissory notes were an unreliable (33) way to trade and could be easily forged (34) as well. People could make fake (35) promissory notes, right? I mean, you could have just faked someone’s signature (36). People often argued about their value, and some used them to pay for goods even though they knew that they could never actually get the money in the future to cover those promissory notes.

And there was even one story of a baker (37) who would take his promissory notes, he’d put them in the oven (38), heat them up (39), in order to make them more brittle (40) and likely to fall apart (41) so that the person who received this note would, you know, lose it, and it would fall apart, and they could never reclaim (42) what they were owed.

Rum was also used as a currency (43) beginning in 1790. So, rum, as in the liquor, right? Johnny Depp drinks rum in Pirates of the Caribbean. You know, “Yar! I’m a pirate and I drink a lot of rum.”

So, it was brought to the colony and controlled by a small group of people who became exorbitantly (44) rich as a result. The issue with rum as a currency was that, as you can imagine, many workers who were paid in (45) rum actually drank it instead of using it to buy goods and services that they needed.

So, the rum trade grew and grew to the point that it became the most popular form of currency in the colony, to the point where major building constructions (46), including the Sydney hospital, were even paid for with rum alone. Only with rum, right? Imagine that! Building a house and only using some kind of liquor or even beer to pay for that house. That’s a lot of slabs, guys. That’d be thousands and thousands of slabs. I can’t imagine that. Remember, a slab (47) is 24 beers.

So, the practice of using rum as a currency was prohibited (48) by Governor Bligh in 1806, and this decision culminated (49) in the overthrow (50) of the government in the Rum Rebellion (51). That’s a really interesting story that I might have to leave for another day.

To overcome (52) the shortage (53) of coins, Governor Macquarie, obviously the next governor, came up with an ingenious idea (54) to use 10,000 pounds of Spanish dollars sent by the British government to produce a more stable currency. So, Spanish dollar coins had a hole punched through (55) the middle of them creating two coins, the larger ring-shaped coin or ‘holey dollar’ (56), because it has a hole in it, and the smaller punched-out (57) middle of the coin called a ‘dump’ (58), because it’s obviously been dumped out of the hole, right, in the other coin. Doing so turned 40,000 Spanish coins into 80,000 Australian coins, making these coins the first currency to be minted (59) in Australia.

These coins entered circulation (60) in 1814, and they began to be taken out of circulation (61) only eight years later, in 1822 and onwards, when the government began to replace (62) them with sterling coinage (63) instead. By the year 1829, these coins were completely gone from circulation, and because they contained a large amount of silver, quite often they were melted down and used for other purposes or sent back to Britain as silver bullion (64), and this makes them incredibly hard to find today and also incredibly valuable (65). And I actually looked to see if I could buy one of these online and I found one for auction that was $459,000. That is the price of a small house. Mind-blowing (66).