I am not a historian. Much of the information presented here is gleaned from
other sources; only the organisation and some commentary is mine. The early economic
history of Australia is a large topic, better dealt with by others. I have concentrated
on those aspects of that history which are relevant to numismatics in general and
to coinage in particular. For example, you may note that I have nothing to say about
the growth of banking which played such an important part in the development of
this country, nor do I dwell on the insurrectionist years following the overthrow
of Bligh for I believe that neither of these had any noticeable effect on the availability
of coins in the colony. If you think I am wrong, please feel free to send me your
This page used to contain pictures of early colonial coinage but I moved the
images to a separate page. They are still available and the links are in the text.
A system born of necessity
When New South Wales was first settled in 1788 the British government made no
provision for a monetary system. The settlement was viewed strictly as a penal colony
which was expected to become self-sufficient within a short time. Everything would
be provided by the British government through the Commissariat (government store).
Salaries of government employees would be paid by government bills drawn on the
English Treasury or the Navy Board and it was assumed that there would be no need
for any other form of money.
Some coin probably came in the pockets of the officers and soldiers of the Crown
and of the few free settlers and possibly also undetected in the possession of convicts.
Writing in the November 2000 issue of the British magazine "Coin News",
Edward Colgan say "Captain Phillip carried £400 in coin on the first
fleet to fund the financial dealings of the new penal colony" but Butlin15
(quoting Phillip's instructions dated 25/4/1787) states that Phillip was given two
directives with respect to expenditure. The first was that he should purchase supplies
and livestock en route, paying by means of bills drawn on the "Lords of the
Treasury". The second was that all public expenditure should be financed by
"warrant", issued by Phillip himself as necessary. Military salaries were
drawn against the Admiralty by the New South Wales Corps paymaster but civil expenditures
were the Governor's responsibility. According to Butlin, the first expenditures
Phillip incurred in the new colony was the need to pay carpenters and sawyers from
Sirius and Supply for work done ashore. These accounts were settled
in small Treasury bills.
It is interesting that the money against which government bills were drawn was
all held in England. There was no local medium of exchange.
As early as November 1788 Governor Phillip requested a remittance of money from
England and sometime in 1790 the Kitty arrived with almost 4500 Spanish dollars
to be spent by Phillip at his discretion. The Spanish dollar (piece of eight) was
the nearest thing in existence to an international coinage and formed the principal
currency of most English colonies. The dollars slowly left the colony as they were
used to pay for goods brought in by visiting ships. Although there was a net drain
of coinage from the colony, the visiting ships left behind a variety of coins as
change from government bills. In addition to British coinage, there were guilders
and ducats from Holland, rupees and pagodas from India and several other coins as
well as a few English and Irish banknotes. The total amount was small and the coins
tended to be exported quickly as they were often the sole means available to individuals
to purchase goods from visiting ships.
In 1803 Governor King acquired 8000 Spanish dollars in two purchases of 500 at 6/- each and 7500 at 5/- each. Apart from those purchases and that first remittance to Phillip there was no attempt to increase the money supply. Free settlers and convicts who had served their sentences needed to buy and sell goods and services. Out of necessity, a fairly sophisticated system of barter became established and many debts were paid in produce, land and labour. The government store, or Commissariat, was the principal buyer of local produce and would issue store receipts for small amounts. Accumulated store receipts could be redeemed for treasury bills but the receipts themselves became negotiable instruments within the colony.
One medium of exchange was alcoholic spirits, generically called rum. Although
much has been written about the use of rum as currency and the abuses which arose
from its supply via the New South Wales Corps, it was just one of several commodities
serving as money. Many other items such as tobacco, sugar, wheat, meat and livestock
were also given and accepted.
Privately issued promissory notes also substituted for currency. In many cases
these were rather crude and easily forged or were issued indiscriminately by individuals
without the resources to redeem them. Notes often remained in circulation for long
periods and some were never presented for payment.
The Proclamation (November 1800)
By 1800 most of those original 4500 dollars had disappeared but left in their
wake a polyglot of British and foreign coins. The total quantity was quite small
and steadily diminishing while New South Wales remained a net importer of goods.
There was no general agreement on the relative values of the various coins in circulation.
For example, some merchants accepted dollars at 4/6, some at 4/8, some at 5/-. The
confusion must have been readily apparent to King because he had only held the office
of Governor for a few weeks when in an attempt to rationalise the situation and
to retain circulating coinage in the colony, Governor King issued a proclamation
fixing the value of various coins in terms of British money, albeit at somewhat
inflated values. The idea was that whereas a guinea would be valued £1/2/-
within the colony, its value would still be £1/1/- to an itinerant trader
who, it was assumed, would be unwilling to accept a guinea as payment for £1/2/-
worth of merchandise.
King's proclamation of 19/11/1800 is reproduced below.
Whereas representations of the want of small money experienced here have induced
His Majesty to take into His gracious consideration the immediate relief from this
great inconvenience to all classes of his subjects in this colony, the quantity
of copper coin has been received from His Majesty's armed vessel Porpoise and Royal
Admiral, and will be circulated by being paid for grain and animal food supplied
to His Majesty's stores.
These are therefore to give notice that a copper coin, weighing one English ounce,
and stamped with the profile of His Majesty on the one side, and of Britannia on
the other, will be issued on above at the rate of twopence for each copper; and
that the same shall pass current in the colony, and is to circulate at the aforesaid
rate of twopence.
And that no one may plead ignorance of the rate or legality of this or any other
of the coins circulating in this colony, of which it does not appear that any regular
proclamation has ever collectively been issued, I have judged it most expedient
herewith to publish the following table of all the specie legally circulating in
this colony with the rate affixed to each at which they shall be considered and
be legal tender in all payments or transactions in this colony.
When a sufficient quantity of copper coins is received in the colony, of which notice will be given, no private notes or goods will be allowed to circulate.
This supply of copper coin having been sent to relieve the inconvenience of persons
requiring to make small payments, no persons are to collect the same for the purpose
of making large payments, nor shall it be deemed a legal tender to offer the same
in payment for any sum exceeding five pounds.
And it is hereby declared that the exportation or importation, except from His
Majesty's Treasury, of any sum exceeding five pounds of the above-named copper coin,
shall be punished by fine of treble the value, and forfeiture of the sum exported
The proclamation above was quoted from Renniks13. The values in the table match those listed by McDonald14 but Butlin15 quotes the value of the shilling as 1/8 in his table and explicitly mentions that figure in the text (p40). 1/8 is quite a lot higher than the value listed by the other authors. Andrew Crellin of Monetarium has a photocopy of the original document and confirms that the values quoted by Renniks and McDonald are correct.
It is important to understand the coinage in circulation in 1800 and subsequent
years was not limited to what was explicitly mentioned in King's proclamation. We
can be sure that there were sixpences and threepences, half mohurs, half-guineas,
third-guineas as well as Spanish doubloons in the colony. Indeed, the basis of fixing
the Johanna at £4 was surely the equivalence of that coin with the Spanish
8 escudos and the established value of the doblón (2 escudos) as £1.
Pictures of all the coins explicitly mentioned in
the proclamation along with a few of the other contemporary coins are available
As a means of keeping coins in the colonies, King's proclamation was not spectacularly
successful. Penalties for exporting coins were ignored and to compensate for the
inflated value of the coins, visiting merchants simply increased their prices. A
probable and certainly unintended side-effect of the proclamation was to reinforce
the division between "sterling" and "currency".
The term "sterling" in the early 19th century did not necessarily mean
British coinage. It simply meant reliable, trustworthy money and referred to silver
and gold coinage of any origin together with monetary instruments negotiable at
face value and ultimately backed by the British Treasury. The monetary instruments
included Treasury Bills and, by extension, government paymasters' bills and government
store receipts. Thus the term "sterling" could (and frequently did) include
instruments issued in dollars and rupees. In contrast, "currency" referred
to privately issued notes together with several commonly traded commodities such
as grain. "Currency" was considered less reliable than "sterling",
probably with good reason. Promissory notes frequently discounted to some degree
depending on the reputation and worth of the issuer, and commodities tended to fluctuate
in price so a bushel of wheat received one day might be worth considerably less
a month later. The over-valuation of copper coinage led to it being classed as "currency"
rather than "sterling".
"Currency" and "sterling" each had their part to play in the cash-starved colonial economy but there was a premium on "sterling". A shopkeeper was likely to give a discount to a patron who paid in "sterling". This is not too surprising when one considers the shopkeeper's position; would he or she prefer a bill drawn on the British Treasury countersigned by the governor, or a hand-scribbled note issued by an ex-convict who may or may not have the means to redeem it.
The Holey Dollar
The acquisitons of Spanish dollars in 1803 were just about exhausted by the time
that Lachlan Macquarie took up his post as the Governor of New South Wales near
the end of 1809. In October 1810 Macquarie requested a supply of £5,000 in
copper coin to be issued at double value as in King's time. While nothing came of
that, Macquarie reiterated through proclamation that copper coin was legal tender
for amounts up to £5 while extending that limit indefinitely for bills whose
mode of payment was specified as copper. The £5 limit was later reduced to
1/3 (i.e. 1s 3d) after the issue of the holey dollar.
In November 1812, Macquarie received 40,000 Spanish dollars shipped from India
by the East India Company under contract from the British government and with instructions
from the Earl of Liverpool to take measures to ensure that they remained in the
colony. To this end Macquarie engaged the services of silversmith and convicted
forger, William Henshall, to punch the centre out of each coin yielding a "ring"
and a "dump". Each piece was to be counterstamped with its nominated value;
the ring at 5/- and the dump at 1/3. Thus £10,000 would yield coinage with
a circulation value of £12,500. In practice, about 100 coins were lost during
the early stages of production because of difficulties with the machinery. These
difficulties led to some considerable delay in delivery of the new coins so that
although they were dated 1813, none was actually sent to the Commissary until early
1814. The whole exercise was completed by August of that year.
The term "holey dollar" was not used officially until about 1820 but
it seems likely that that unofficial use of the name was almost immediate.
Today fewer than 300 genuine holey dollars are known and maybe 1500 dumps exist.
For more information see the catalogue by Mira and Noble20
which also shows pictures of most of the surviving holey dollars. Another article
worth reading is the one by Stewart McLeod23
in JANS. On this site pictures of just two holey dollars and
one dump are available for viewing.
The punch and counterstamp style of mutilation ordered and sanctioned by Macquarie
was not unique to New South Wales. A quick scan through Craig's catalogue22 shows that similar mutilations had
occurred in British Guiana (1808), Prince Edward Island in Canada (1813), Dominica
(1761-1818) and St Vincent (1798) and in their catalogue Mira and Noble say that
Macquarie was emulating his colleagues in the Americas and West Indies. It is conceivable
that that Macquarie or members of his staff knew of the practice, particularly from
the Caribbean colonies.
That it was possible to convert a 5/- coin into two worth 6/3 was certainly noted
with interest by some inhabitants of the colony who quickly sought to emulate the
fine example set by the government of the day. The result was a number of contemporary
counterfeits of the ring dollar and dump, a few of which are illustrated by Mira
and Noble. Some of the forgeries were crude and were executed by simply punching
out the centre of a Spanish dollar without bothering to imprint any counterstamp.
Others were more sophisticated and were really quite good forgeries. One of the
most interesting was a well-executed counterstamp with the date reversed (3181 instead
of 1813). It is difficult to imagine how the forger could have taken so much care
to produce such a good copy of the genuine article and yet still manage to make
such a glaring mistake. We can speculate that if the forger subsequently corrected
this error then he may well have succeeded in producing a significant number of
high-quality counterfeits which passed unnoticed in the colony.
Colonial dollars and dumps were current coin in the colony for several years
until they were recalled in 1822 as part of the establishment of the Spanish dollar
as the official currency of New South Wales.
The Dollar Standard
In the years 1822 to 1825 under the governorship of Brisbane, the colonies in
New South Wales came very close to adopting the dollar as the principal unit of
currency. According to Butlin, the main proponent was not Brisbane himself but the
Colonial Secretary, Major Goulburn.
Holey dollars and dumps were exchanged at nominated value provided they were
presented before 5/9/1822 in New South Wales and 21/9/1822 in Van Diemen's Land.
Thereafter the rings were re-issued as 3/4 dollars and the dumps as quarter dollars.
This was a devaluation of the holey dollar, necessary to restore parity with the
unmutilated coins. Less obviously, it was also a devaluation of the dump. During
the transition period, rings and dumps were received at 5/- and 1/3 respectively
but when the coins were re-issued the value of the Spanish dollar was set at 4/-.
(The ring had dropped in value from 5/- to 3/-.) Copper coins were to be valued
in terms of dollars, with a halfpenny equal to one cent.
The exchange rate between the dollar and the pound varied according to the type
of transaction in such a way as to suggest official profiteering and favouritism.
In 1825, for example, when the government paid for goods and services it reckoned
the dollar at 5/-, payments to troops were at a rate of 4/8, government transactions
used a rate of 4/4 and salaried officials were paid at the rate of 4/- to the dollar.
Naturally, this evoked a good deal of unrest and caused the dollar to be viewed
with some disfavour despite its acknowledged usefulness as a medium of exchange
within the colony. (See Butlin pages 150-154 for more details.)
In May 1825 the exchange rate was fixed at 4/4 for all transactions but this
did not establish the dollar as the unit of currency. It simply meant that dollars
and pounds were inter-convertible at a standard rate.
The death blow to the dollar standard was dealt by the British Treasury which
in 1825 sought to impose a uniform medium of exchange throughout all sections of
the Public Service. To this end it arranged for substantial shipments of English
coin to the colonies and issued Orders-in-Council providing that dollars could be
substituted at the rate of 4/4 until such time as sufficient English coin became
available. The first shipments of coin arrived in late 1825 and with stewardship
of New South Wales transferred to Governor Darling (and separated from Tasmania)
the gradual withdrawal of the Spanish dollar commenced.
The Regnal period, 1826-1909