A 1934 Ten Pound Riddle/Sheehan banknote with the image of King George V. The Coat of Arms on the banknote accurately conformed to the heraldic description of the 1912 Arms grant. The ‘bordure ermine’ which had previously been omitted was added and the quartering of the State Emblem corrected. The total number printed was 3,076,000.
Collecting Australian Currency An Introduction
By Richard Fahy & Bernie Low
Australia’s history of currency stretches back to the earliest convict days over 200 years ago. It has evolved through five stages, beginning shortly after settlement in 1788.
The Early Years
When the First Fleet set sail from England in 1787, little consideration was given to a monetary system. It was anticipated that a Government Store would satisfy the needs of the military, and that the convicts would not need cash. Soon after the Fleet arrived in Sydney (on die 26th of January 1788), the need for currency became very evident Visiting trading ships brought in a variety of English, Dutch, Indian and other assorted coinage but this influx was countermanded by the fact that visiting traders, having been paid for their goods, sailed away with the cash.
A barter system sprang up among soldiers, convicts, and free settlers alike. A day’s labour could be exchanged for flour, pig flesh, rice, timber, and more notably, rum. The Rum Rebellion of 1807 was the result of a conflict of interest between the military and the Governor over the large profits from the importation, control and distribution of West Indian rum. Troops had to be sent from England to quash the revolt.
The melee of foreign currencies which circulated in Sydney had a variable and negotiable value until Governor King regulated and ‘proclaimed’ the value of each coin in 1800: this became known as proclamation money. In 1813 Governor Macquarie commandeered a cargo of 30,000
Spanish dollars, punching a hole in each one to make them worthless outside the Colony: these coins are the famous ‘holey dollars’.
The Government Store did print rudimentary cheques (c.1810‑1820) to meet short‑term shortages of ‘real’ currency. They were either hand written or issued by the Government Store in a crude chequebook form. Merchants and shopkeepers followed suit with their own promissory notes and IOUs which took on the role of a defects currency; however, it became evident that regulation was needed as they were easily forged and unscrupulous traders could issue worthless notes with no monetary backing.
Colonial or pre‑Federation banknotes first appeared when Macquarie established the Bank of New South Wales in 1817, and it is said that this saved the colony from ruin. Many new banks, such as the British Colonial Bank and the Bank of Van Diemen’s Land, opened as the fledgling economy boomed during the 1820s and 1830s. However, bust often followed boom and many closed down during the 1840s depression.
The next boom, fuelled by the discovery of gold in the 1850s, brought new banks and banknotes onto the scene. The notes were usually signed by senior bank officials, and offered notes for gold (miners could not easily move or hide nuggets and bullion), promising to redeem the notes for gold again. The result was that banknotes began to achieve a wide circulation and become an accepted form of currency.
A 1926 Ten Shilling Kell/Collins ‘Half Sovereign’ banknote. The total number printed was 53,212,882.
During the nineteenth century, dozens of private banks produced their own notes. Not many of these antique banknotes have survived and they are much sought after, especially uncirculated specimens. The rarest and most beautiful Australian banknotes were created during the era between the opening of the Bank of New South Wales and Federation.
Gold sovereigns were also produced within Australia during this period, a direct result of the discovery of gold. Control of the Australian monetary system was hotly contested between individual states and amid fierce rivalry to be the first to produce a national currency, South Australia issued the Adelaide pound, a 1.5 ounce, 22 carat gold coin, in 1852. However without the blessing of the British Government and Queen Victoria it was destined for short supremacy, and was recalled when Sydney received the Royal assent.
Sovereign production began at the Sydney Mint in 1865 and early coins show a young Queen Victoria with a sprig of banksia in her hair. They were enormously successful, becoming legal tender right across the Commonwealth, including in Britain. Today these early Sydney Mint coins change hands for six figure sums. Australian gold coins have always had a worldwide reputation for quality and purity.
The depression of the 1890s caused the banks to close their doors, some with the loss of depositors’ funds. This roller coaster ride lasted until Federation in 1901 ‑ the same year as the death of Queen Victoria ‑ when a Commonwealth‑backed national currency was developed.
While the Federal Government wanted to establish a (badly needed) national currency, the powerful banking lobby resisted. One perception was that a desperate government might print more money than it kept in gold reserves, causing inflation, deflation, or even economic collapse, as had happened during the American Civil War when millions of surplus greenbacks had been printed. Another perception among the middle and upper classes was that the working classes, in handling small denomination notes, would pass on smallpox and other diseases.
After years of debate, the Bank Notes Tax Act was passed in 1910. However, several obstacles still stood in the way. Firstly, special cotton‑based paper had to be shipped from London. There was die design and engraving of the note plates to attend to, and there was no machinery in Australia on which to print notes. Then there was the question of the millions of private banknotes already in circulation. As the Government was keen to implement the legislation, it resolved the matter by buying unused stocks from banks and ‘superscribing’ them with a universal overprint. This area of collecting is quite specialised, and keen collectors can identify very slight variations in superscriptions. By 1912, the National Bank’s notes were used exclusively to superscribe, partly for uniformity and partly as a means to combat forgeries (each bank was suspicious of other banks’ notes as their authenticity could not be easily confirmed).
In May 1913 production began of a national paper currency ‑ now known as pre‑Decimal notes ‑ with the tenshilling note. (At a 1998 auction in Sydney numbers 000004 and 000005 were sold for over $250,000). This was followed by the £1, £5, £10, £20, £50 and £100 notes in 1914. There was a £1000 note produced, but it is almost extinct and 1 don’t know of any in private hands ‑ such a note would have a value of at least $200,000.
The outbreak of World War I in 1914 caused a shortage of notes, as Britain was unable to send paper across the world when ships and resources were needed for the war effort. To solve the crisis, £1 notes were printed for a time on any paper that could be mustered, and disjointed lettering can be seen on some notes. These became known as Emergency Pounds and they are also known as Rainbow Pounds because of the varying ink colours. Their simple design prompted forgeries, and they were recalled as soon as deliveries of paper resumed. They are much sought after these days.
A 1936 Ten Shilling Riddle/Sheehan banknote depicting the image of George V. This was the third type of legal tender banknote and was introduced as a result of complaints that it was difficult to distinguish between the notes used and other denominations. The size of this banknote was reduced to that used for the Bank of England banknotes. The total number printed was 98,120,000.
A 1942 Ten Shilling Armitage/McFarlane banknote featuring the image of King George VI.
or many years, when a note was damaged or destroyed in the printing process, its serial number had to be painstakingly reprinted by hand onto a brand new note. Then in 1949, it was decided to issue a separate run of notes to replace spoiled notes, with the last number on the replacement being changed to an asterisk or star ‑ the notes being known as star replacement notes. This is the fastest growing and most exciting area of collecting, and many star notes are appreciating at over 20 percent per annum. A Phillips/Randall $20 decimal star banknote is currently rising at the rate of 30 percent per annum and is currently valued today at $17,000.
The next major milestone in the history of Australian currency occurred on 14 February 1966 when Australia changed to decimal currency, introducing us to $1, $2, $5, $10 and $20 notes, followed by the $50 in 1974. The $1 was replaced with a coin in 1984 when the $100 note appeared. The $2 coin was phased out in 1985.
Then in 1988 Australia experimented with a polymer note, which was so successful that by 1996 all paper notes had been replaced by polymer. Australia now produces polymer notes for several other countries.
Collecting banknotes is one of life’s most exciting, rewarding and fastest growing hobbies. There are numerous books and magazines to which collectors can refer; dealers and experts at the many fairs and auctions will discuss any topic at length; and there are sites springing up on the internet, allowing you to discuss and exchange notes with collectors from every corner of the globe. It is also one of the most reliable investment vehicles: a recent economic report showed that in the ten years between 1987 and 1997 the value of rare Australian banknotes increased by almost 500 percent, outperforming all other investment vehicles.
Richard Fahy is Director of The Right Note, specialists in rare Australian banknotes.