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Money to pay the troops

The Colonial, or Holey dollar as it became better known, was over-stamped around the inner rim. One side bore the words 'New South Wales' and the date '1813' while the other side displayed a spray of leaves and the wording 'Five Shillings'.

 details below

The Dump was about the size of our modern 5 cent piece and was re-struck after being cut from the dollar. A crown surrounded by the words 'New South Wales' and the date '1813' appear on one side with the words 'Fifteen pence' across the centre of the other side. The dump is slightly larger than the hole from which it came due to the spread of metal during re-striking.

In the beginning . . .

The settlement of Australia by Europeans began with the departure of the First Fleet from England in 1787.  The English Government provided none of the normal implements of commerce and trade, such as coins and banknotes. This was a time of severe currency shortage in the United Kingdom, with tradesmen's tokens, countermarked coins, bank tokens and other money of necessity circulating freely. No coinage was available to England's colonies. Officials of the new colony would be paid in produce from the company store and even free citizens would have little need of money.

When Captain Arthur Phillip, Governor of the new settlement, arrived in Sydney Cove in 1788 with eleven ships and 1,487 people, including 759 convicts, the small colony was virtually penniless. Apart from 300 pounds in currency held by the Governor, the only coins available were those carried in the pockets and purses of the passengers. It was not foreseen that the small colony would almost starve to death because of drought, poor soil and various other problems which made it impossible for the settlement to become self-sufficient.

The first fleet brought sufficient provisions, with careful rationing, to keep its passengers alive for only two years. Their survival relied on the ability of the convicts to work the land and harvest crops. However, no-one had made allowances for the lack of farming experience, the unfamiliar soils or the harsh climate they found.

The first year's crop failed and most of the next year's harvest was required to replenish seed stocks. Draft animals and proper farming equipment were not available - it was more than 15 years before a plough was used in the colony. For the first five years the colony lived on the edge of starvation. The prolonged drought forced Phillip to spend some of his hoard of pounds to obtain supplies from Cape Town.

In 1792 the rain finally came and a successful harvest enabled the colony to become self sufficient in food production. In an ironic twist, it was only after this that trading ships from distant lands began to arrive, bringing with them the colony's first 'consumer goods' - clothing, boots, butter, tea and rum. The colonists now required some form of currency to pay the traders for the goods delivered. Attempts to induce the ships' captains to accept promissory notes (which could only be redeemed on the next visit to England), failed as they wanted cash to buy fresh cargos on the way.

The colonial authorities back in England had no inclination to send coinage to the settlement, knowing full well that it would be immediately spent on trade goods and disappear out of the colony within weeks of its arrival. Australia had a balance of payments problem from the very start.


Cut Dollars.

The Australian way of cutting the dollar was different from the American 'pieces of eight'. A & G equalled 1 shilling and six pence. (15 cents). B C D & F were valued at six pence each (5 cents), E was worth 1 shilling (10 cents).
  • The practice of cutting Spanish dollars into smaller segments to provide a fractional currency was a well accepted practice in many countries by the time the colony was established at Sydney Cove. The practice led to the famous term 'pieces of eight', where the original coin was quartered, and then each quarter segment was halved, leaving eight, approximately equal, pieces. 
  • The American term 'two bits', is derived from two of these pieces being equal to quarter of a dollar or 25 cents.

Holey Dollar see photos above

The strategy of mutilating each coin, which had been used in various other countries at that time, effectively caused traders to spurn it. Macquarie's master stroke in creating the Holey Dollar had created two coins out of one. Not a mutilation but 2 whole coins. The outer ring which he called the Colonial dollar had a new value of five shillings (in those days called a dollar). The inner portion, called the Dump, was valued at fifteen pence (1 shilling and 3 pence).

Macquarie's initiative dramatically increased the number of coins in circulation and distinguished them as local currency, therefore deterring their removal from the colony on departing trading ships. Not only did the coins solve the immediate currency problem, but Macquarie also made a substantial profit in the process. He had paid four shillings and nine pence for each silver dollar, but the new face values totalled six shillings and three pence.


British penny, 1797 (Cartwheel penny)

This is an example of the 1797 British penny, which became the first official Australian coin after a shipment arrived in Sydney in 1800. The coins in this shipment were given a local value of two pence by a proclamation of the Governor. The coins remained in use for some 60 years and found their way to Melbourne in the 1830s and 1840s. Examples found in archaeological excavations can be seen in the Melbourne exhibition. The coins were made in Birmingham by Matthew Boulton on presses driven by James Watt's new steam engine. It was the first use of the new engine.
Obverse Bust of King George III laureate facing right. Around, incuse on a broad rim: GEORGIUS III D:G: REX (George the third, by the grace of God, King). Reverse The back of the coin depicts a seated figure, Britannia. Impressed into a raised rim is the legend BRITANNIA 1797.
Called Cartwheel pennies they were big, ugly and heavy, and Australia's first official coins. The 'Cartwheel' pennies were not received enthusiastically. Historically, however, they are magnificent. 

They were the first coins officially exported to the colonies and included the first copper pennies ever struck in England. 

They were also the first English coins to be struck using steam power.

The coins were dated 1797 and 1799 and all bore a rather unflattering portrait of George III on one side and Britannia on the reverse.

Members of the New South Wales Corps had the ability to raise capital by borrowing against their regimental pay, which was accumulating back home in England. It was this facility which enabled the elite of the Corps to snatch control of trade in the colony and establish rum as the most common currency.

This happened in 1793 after the arrival of the American trading ship, the 'Hope', with 7,500 gallons of rum in her cargo. The other goods she carried were desperately needed but the Hope's incorrigible captain insisted that he would sell nothing to the colonists unless they first bought all of his rum. The New South Wales Corps officers saw this as an opportunity rather than a rort and formed a syndicate, with regimental paymaster John Macarthur at it's head, pulling the necessary financial strings.

They bought the cargo and distributed it at a huge profit. The vast pool of rum flooded into the market place at grossly inflated prices and at once became a means of exchange. For their efforts, the New South Wales Corps were immediately dubbed the 'Rum Corps', a name which stuck until their recall to England in 1810. 

  • The rich pickings they made from that first deal gave them the power to monopolise almost all trade, particularly that in rum (the name given to all spirits), for the next 17 years.

A well documented case connected with the rum trade was the construction of Sydney's (and Australia's) first hospital - more commonly known as the Rum Hospital. Built on the orders of Governor Macquarie between 1810 and 1816, the contract was let out to three entrepreneurs, D'Arcy Wentworth, Alexander Riley and Garnham Blaxcell in exchange for the rights to import 60,000 gallons of rum.

They used part of this rum to pay the wages of the hospital construction workers, and made a fortune in doing it. The consortium paid 10 shillings a gallon for the rum and then inflated the value to 2 17s 6d. Ironically, forty years later a part of this building would be converted to house the Sydney Mint for the production of official gold sovereigns and half sovereigns.


Colonial Banknotes

Coverage of Australia's early currency would be incomplete without a reference to the banknotes issued by private banks. The Bank of New South Wales, Australia's first public company, was founded in 1817. The scheme to create the bank was undertaken by Governor Lachlan Macquarie and a group of wealthy colonial businessmen.

The formation of the new bank reflected the confidence of the private businessmen in the future of the colony. It was to be the first of many such public investments. By 1850, the colony had a fully fledged currency system with over thirty banks providing the cornerstone for a rapidly increasing volume of commerce.

The issue of private banknotes from 1817 was one of the most important financial feats in Australia's history, paving the way for the economic growth and prosperity which followed. During the course of the next 90 years, a wide variety of banknotes were issued. Many banks did not survive the 'boom and bust' nature of the times while others, through mergers, name changes and takeovers, exist in the three major banking groups of today - ANZ, NAB and Westpac.

Many banks, with wealth invested from overseas, made the largest contribution to the fledgling economy, providing a large proportion of the capital needed for the pastoral expansion which occurred from the 1830's onwards.

A 1,000 Pound ($2,000) note, 1918. It would take a private soldier 9.13 years to earn one of these.
The Australian 1,000 note was not introduced until the outbreak of the First World War in 1914, which had resulted in the hoarding of gold. The Australian Government saw the need for some other way of settling balances between the banks, apart from the physical transfer of the precious yellow metal.

The gold sovereign and half sovereign were still the normal medium of currency for the public. This was despite the government having commenced issuing its own banknotes in 1910, and in 1913 was printing notes that still made the promise that the note could be redeemed for gold from the Treasury.

War broke out in August 1914 and a month later the first 1,000 notes were printed and some six thousand of them were delivered to the Treasury. Five months later another ten thousand were received. It was at this time that the authorities realised that the poor quality of the printing of the notes meant that they might be relatively easy to counterfeit. The Governor of the Commonwealth Bank, who asked that no 1,000 pound notes be allowed to get into the hands of the Australian public, issued a directive in June 1915.

1918, a 20 pound ($40) note, or "20 quid" or a "bluey", over 2 months pay for a private Digger
10 shillings or "10 bob" or of 1 pound ($1).  Soldiers were paid 6 shillings per day.  

Circa 1939

5 pounds or "5 Quid" ($10).

Nearly 17 days pay for a Digger.

circa 1939/45

1 pound, circa 1952/1956

Over 3 days pay for a Digger.

This is the back view of the note above
  • This is an unusual and not often seen or used Australian coin. It is valued at 5 shillings (50 cents) and was called a "crown". This is a 1938 version and is shown oversize.
Australian penny, 1946 (equivalent 1 cent) shown oversize

1914/18 era coins

  • Approximately correct size. (Slightly smaller than correct) 
  • In WW2 the coins were same value but had different markings.

1939/45 era coins

  • Half penny  cent
  • Penny 1 cent
  • Florin (2 shillings) 20 cents
  • Shilling 10 cents
  • Three-pence 3 cents
  • Sixpence 5 cents

A 1934 New Zealand ten shillings note (half of 1 pound)

Australian and New Zealand five dollar coin set commemorating the 75th anniversary of Gallipoli : Albert Tull. Associated with Albert Tull, born at Stroud, New South Wales (NSW) on 20 September 1896. He enlisted in the AIF at West Maitland, NSW, on 20 March 1916 as 3492 Private Albert Tull and arrived in England on 29 January 1917. He joined 3 Battalion, 1 Division AIF, and sailed for France on 11 September 1917. He returned to Australia on 2 September 1919 and was discharged from the army on 10 October 1919. He died on 19 November 1998 aged 102 years.
In 1941-42, three internment camps were built 2km from the township of Hay. 

Each camp held 1000 internees from Italy and Germany. The Allied forces had detained these civilians because they were perceived as security risks to the European war effort. 

Despite early newspaper reports that the internees of Hay were dangerous, guards described their detainees as "well educated and anti-Nazi". 

Most were intellectuals detained as a matter of precaution and "national security". (Information from www.csu.edu.au). 

Some of the internees were German-Jewish refugees who had sailed from Britain to Sydney on HMT Dunera in September 1940. The donor was a German Jewish internee at the camp.

AWM RELCO2552.006 and others

Paper currency notes printed in blue/green/red and black. Depicted on the obverse is a kangaroo and emu coat of arms with a merino sheep on the shield, all in front of a barbed wire fence. A ribbon legend under the shield reads "CAMP SEVEN BANK", while the words "HAY, 1st March, 1941" appear to the left of the kangaroo, and the word "MANAGER" to the right of the emu. Under each of these words appears a signature - three combinations were possible, (Mendel and Stahl; Eppenstein and Stahl; Robinson and Stahl) and Stahl's name always appears under "Manager" - he was an interred German banker. The scene is bordered by a barbed wire decoration. The reverse side is decorated with 25 sheep (representing the Camp's 25 huts), each with a 7 on its back, and is overprinted with the words "THIS NOTE IS VALID ONLY / WITHIN THE BOUNDARIES / OF / CAMP SEVEN / INTERNMENT CAMP HAY. The Bank is under no obligation to honour this Note if presented by Holder outside this Camp." A number of hidden names appear within the design of the note: Camp leader, W. Eppenstein's name is written within the fleece of the sheep on the shield, while the name of each hut leader is included within the fleece of the 25 sheep on the reverse. The obverse barbed wire decoration forms the words "we are here because we are here because we are here". The designer's details, "George A . Teltscher del 1941" also appears in the bottom right of the obverse.
  • Also refer to Military Payment Certificates (MPC) on Funny Money
 

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Digger History:  an unofficial history of the Australian & New Zealand Armed Forces