Private Banknotes in Australia 1817-1901

Ever since English colonial settlement in 1788, Australia has had a colourful history of currency. A shortage of money in the early years of the colony led to the development of a barter system. Rice, flour, timber, and even labour were traded, until, in a unique Australian way, we based our economy on liquor, particularly West Indian rum. It built our first hospital and the road to Parramatta. Troops had to be dispatched from England to break the stranglehold that the military held on the economy, and the regimental commander, subsequently to become our most prominent Governor, was Lachlan Macquarie who was responsible for giving us our first bank and reforming the Australian economy up to the 1820s.

1 Pound National Bank of Australasia. Issued Adelaide
Australia. Circa Jan 1894. Uncirculated Specimen

In this period leading up to Federation, control of our monetary system was contested between the individual states. Amid fierce rivalry to be the first to produce a national currency, and as a result of the discovery of gold and the subsequent gold rush, South Australia was first in 1852 with the Adelaide pound – a 1 1/2 ounce, 22 carat gold coin. However, without the blessing of the British Government and Queen Victoria, it was destined for short supremacy, and it was recalled when Sydney received the Royal assent.

Sovereign production began in 1855 and early sovereigns showed a young Victoria with a sprig of banksia in her hair (much to the chagrin of the British Government). It was enormously successful, becoming legal tender across the Commonwealth, even in England, and some of the early Sydney Mint coins change hands today for 6-figure sums (Australian gold coins have always had a world-wide reputation for quality and purity).

Our earliest banknotes were made to meet short-term shortages of ‘real’ currency. They were either handwritten or issued from the Government store in a crude chequebook form. This process was developed by shopkeepers and merchants who began to produce their own promissory notes, or IOUs, and as these evolved into a popular form of exchange, it was inevitable that forgeries appeared at the same time. This in turn prompted even more intricate and complex designs by artists and printers.

Banknotes demonstrate beautifully the skills of the engraver, and are unquestionably works of art in themselves. The large area of a banknote, compared to, say, a coin or a stamp, allowed the craftsmen to demonstrate their remarkable talents. There were only a handful of top class engravers in the world, and even a trainee engraver who showed considerable talent would work for many years before being allowed anywhere near an engraving plate – low denomination banknotes demanded the same quality of workmanship as high ones.

Banknotes produced during this era in our history, which commenced when

Governor Macquarie opened the Bank of New South Wales in 1817 and lasted until 1 January 1901, are known as pre-Federation notes. Australia’s economy was booming in the 1820s and 1830s and a number of private banks came into being, some with exotic names like the British Colonial Bank and Loan Society or the English, Scottish & Australian Chartered Bank (the forerunner of ANZ and ESANDA). However, with boom came bust, and many banks closed their doors during the 1840s depression. The next boom, fuelled by the discovery of gold in the 1850s, again brought new banks onto the scene. Banks paid for gold with notes (miners preferred notes rather than heavy sovereigns which could not easily be hidden) and in this way banknotes achieved a wide circulation and became an accepted form of currency.

True Australian antiques in their own right, some of our most beautiful works of art are to found on pre-Federation banknotes. They are an important link to our past, and to hold a banknote from 1845 or 1875 gives one an eerie feeling as one wonders which long-dead wealthy identity has held and beheld the same article.

Glossary of Terms

• Bank of Issue – a bank that was authorised to produce its own notes.
• Counterfeit- a note made by an unauthorised artist/printer, designed to pass for the genuine article. Some counterfeit notes are sought-after these days.
• Denomination – face value of a note.
• Grade – a set of guidelines to describe a note; thousands of dollars can rest on slight differences in grading.
• Numismatics – the study and collecting of coins, notes, medals, stamps, etc.
• Obverse – the front of a note, as opposed to the reverse.
• Prefix/Suffix – letters before and after the serial number on a note.
• Specimen – a special note designed as a perfect example, generally not used in circulation.
• Watermark – a pattern, design or portrait not visible on a banknote until it is held in a certain way. It is designed to defeat counterfeiting.

© 1999 – 2003 The Right Note.

Richard E. Fahy AFAIM AFAMI