When colonists first arrived in Australia establishing a stable and acceptable currency was obviously far from the top of the important to do list of the colonists here.
The First Fleet arrived on Australian shores with only the currency it had onboard the ships, which included about 300 pounds of English coinage. 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 Captain Phillip, and the only other money that was there on the ship and that made it to the colony was a bunch of other foreign currencies that had been brought over in the pockets and purses of officers, sailors, and passengers, a.k.a. convicts 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 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, when people didn’t agree on the value of these different currencies.
The other issue with currency was the fact that there was a lack of these coins and they were often taken out of the colony by trading ships, ships that came to the colony and then left after selling stuff. And this is where promissory notes came into play.
Promissory notes were signed documents with a written promise that a person would owe the holder of that promissory note a certain amount of money. So, effectively, an I Owe You (‘IOU’), right, I owe you some money. We often call those IOU’s.
So, colonists tried paying trade ships with these notes that promise traders would be able to exchange this for cash payment when they arrived in England. However, as you would imagine, many traders often refused and wanted cash in exchange for the goods that they were selling on their journey.
So, promissory notes were an unreliable way to trade and could be easily forged as well. People could make fake promissory notes, right. I mean, you could have just fake someone’s signature. 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 who would take his promissory notes, he’d put them in the oven, heat them up, in order to make them more brittle and likely to fall apart so that the person who received this note would, you know, lose it, it would fall apart, and they could never reclaim what they were owed.
Rum was also used as a currency beginning in 1790. So, rum, as in the liquor, right? Johnny Depp drinks rum on 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 rich as a result. The issue with rum as a currency was that, as you can imagine, many workers who were paid in 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, 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‘ is 24 beers.
So, the practice of using rum as a currency was prohibited by Governor Blight in 1806 and this decision culminated in the overthrow of the government in the Rum Rebellion. That’s a really interesting story that I might have to leave for another day.
To overcome the shortage of coins, Governor Macquarie, obviously the next governor, came up with an ingenious idea 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 the middle of them creating two coins, the larger ring-shaped coin or ‘holey dollar’, because it has a hole in it, and the smaller punched-out middle of the coin called ‘a dump’, because it’s obviously being 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 in Australia.
These coins entered circulation in 1814 and they began to be taken out of circulation only eight years later in 1822 and onwards when the government began to replace them with sterling coinage 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, and this makes them incredibly hard to find today and also incredibly valuable. 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.
A baker – a person whose trade is making and selling bread and cakes.
A bunch of ST – a number of ST; a lot of ST
A colonist – a settler in or inhabitant of a colony.
A colony – a country or area under the full or partial political control of another country and occupied by settlers from that country.
A convict – a person found guilty of a criminal offence and serving a sentence of imprisonment.
A holder (of ST) – a person that holds something.
A lack of ST – an absence of ST
A passenger – a traveller on a public or private conveyance other than the driver, pilot, or crew.
A pirate – a person who attacks and robs ships at sea.
A pocket – a small bag sewn into or on clothing so as to form part of it, used for carrying small articles.
A pound – a unit of weight equal to 16 oz. avoirdupois (0.4536 kg), or 12 oz. troy (0.3732 kg); the basic monetary unit of the UK, equal to 100 pence.
A promissory note – a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand.
A purse – a small pouch of leather or plastic used for carrying money, typically by a woman.
A sailor – a person whose job it is to work as a member of the crew of a commercial or naval ship or boat, especially one who is below the rank of officer.
A shortage (of ST) – a state or situation in which something needed cannot be obtained in sufficient amounts.
A signature – a person’s name written in a distinctive way as a form of identification in authorizing a cheque or document or concluding a letter.
A slab – a box of 24 beers
A to do list – a list of tasks that need to be completed, typically organized in order of priority.
A trader – a person who buys and sells goods, currency, or shares.
A trading ship – a boat carrying traders who buy and sell goods, currency, or shares.
Acceptable – able to be agreed on; suitable.
Agree on ST – have the same opinion about something; concur.
An I Owe You / IOU – a note from a person promising another person ST they own them
An ingenious idea – an amazing plan, thought, etc.
An issue – a problem.
An officer – a person holding a position of authority, especially one with a commission, in the armed services, the mercantile marine, or on a passenger ship.
An oven – an enclosed compartment, usually part of a cooker, for cooking and heating food.
An overthrow (of ST) – a removal from power.
As you would imagine,… – just like you can think would be the case…
Be taken out of circulation – so as to be no longer passing from person to person or place to place.
Brittle – hard but liable to break easily.
Coinage – coins collectively.
Come up with ST – produce (something), especially when pressured or challenged.
Cover ST (a topic) – completely discuss (a topic).
Culminate (in ST) – reach a climax or point of highest development.
Dump ST out of ST – to put (something) somewhere in a quick and careless way.
Enter circulation – passage from place to place or person to person
Establish ST – set up on a firm or permanent basis.
Exchange ST (for ST) – give something and receive something of the same kind in return.
Exorbitantly – exceeding the customary or appropriate limits in intensity, quality, amount, or size.
Fake – not genuine; imitation or counterfeit.
Fall apart – break up, come apart, or disintegrate.
For auction – sell or offer for sale at an auction.
Forged – copied fraudulently; fake.
Goods – merchandise or possessions.
Goods and services – Goods are items that are tangible, such as pens, salt, apples, and hats. Services are activities provided by other people, who include doctors, lawn care workers, dentists, barbers, waiters, or online servers.
Heat ST up – cause ST to become hotter.
Held by SO – supported by SO, usually in their hands.
Liquor – alcoholic drink, especially distilled spirits.
Major building constructions – the creation of important structures or buildings.
Mind blowing – amazing; shocking; surprising.
Mint ST – make (a coin) by stamping metal.
Onboard – available or situated on board a ship, aircraft, or other vehicle.
Onwards – in a continuing forward direction; ahead.
Overcome ST – succeed in dealing with (a problem or difficulty).
Owe (SO ST) – have an obligation to pay or repay (something, especially money) in return for something received.
Paid in ST – given money in the form of ST, e.g. cash, cheque, promissory note, etc.
Produce ST – create or make ST.
Prohibited – banned; not allowed.
Punch through ST – penetrate through ST.
Punched-out – the state of being removed from being in ST by having been punched out of it.
Reclaim ST – retrieve or recover (something previously lost, given, or paid); obtain the return of.
Refuse ST – indicate or show that one is not willing to do something.
Replace ST (with ST) – provide a substitute for (something that is broken, old, or inoperative).
Ring-shaped – in the form of a ring.
Rum – an alcoholic spirit distilled from sugar-cane residues or molasses.
Silver bullion – silver that has been melted down into the form of bars or ingots.
Simultaneously – at the same time.
Stable – not likely to change or fail; firmly established.
Sterling coinage – coins made of 92.5% pure silver, or ST of very high quality.
Take place – occur; happen.
The practice (of ST) – the actual application or use of an idea, belief, or method, as opposed to theories relating to it.
The Rum Rebellion – the deposition of Governor William Bligh in 1808 by officers of the New South Wales Corps, caused by his interference in their trading activities, especially in the trafficking of rum.
Unreliable – not able to be relied upon.
Valuable – worth a great deal of money.
With ST alone – only with ST