Australian pound

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Australian pound
Australia 10 Shillings.jpg Australian 1951 sixpence.jpg
10 shillings 6 pence
Central bank Reserve Bank of Australia
User(s) Australia
Pegged with British pound at par, and then A£1 = GB 16s (£0.8)
Pegged by New Guinea pound at par
Subunit
 1/20 shilling
 1/240 penny
Symbol £
shilling s
penny d
Plural  
penny pence
Coins ½d, 1d, 3d, 6d, 1s, 2s
Banknotes
 Freq. used 10s, £1, £5, £10
 Rarely used £20, £50, £100, £1000
This infobox shows the latest status before this currency was rendered obsolete.

The pound (symbol £, or when distinguished from other currencies called the pound) was the currency of Australia from 1910 until 14 February 1966, when it was replaced by the Australian dollar. It was subdivided into 20 shillings (symbol s), each of 12 pence (symbol d).

History[edit]

Earlier Australian currencies[edit]

The history of currency in Australia could be said to begin in 1800, when Governor Philip Gidley King issued a proclamation setting the value of a variety of foreign coins in New South Wales. However, because of the shortage of any sort of money, the real currency during the first twenty-five years of settlement was rum, leading to terms such as the "Rum Corps" and the "Rum Rebellion".

Australia's first coinage was issued in 1813 by the colony of New South Wales by punching the middle out of Spanish dollars. This process created two parts: a small coin, which was called the dump in Australia, and a ring, which was called a holey dollar. One holey dollar was worth five shillings (a quarter of one pound sterling), and one dump was worth one shilling and three pence (or one quarter of a holey dollar). This was done in order to keep the coins in New South Wales, as they would be valueless elsewhere.

In 1825, an Imperial order-in-council was issued with the purpose of introducing sterling coinage to all the British colonies. This was due to the introduction of the gold standard in the UK in 1816, and a decline in the supply of Spanish dollars. Most of the dollars used had been minted in Lima, Mexico City, and Potosí, which had become part of new Latin American republics, independent from Spain.

From 1817, when the first bank, the Bank of New South Wales, was established, private banks issued paper money denominated in pounds. In 1852, the Government Assay Office in Adelaide issued gold pound coins. These weighed slightly more than sovereigns. From 1855, the Sydney mint issued half sovereigns and sovereigns, with the Melbourne mint beginning production in 1872. Many of the sovereigns minted in Australia were for use in India as part of a plan that the gold sovereign should become the imperial coin. As it turned out, India was already too entrenched in the Rupee system, and the gold sovereigns obtained by the treasury in India never left the vaults.

City Bank of Sydney in Australia cancelled £20 banknote

Thus, in the lead-up to Federation, the currency used in the Australian colonies consisted of British silver and copper coins, Australian minted gold sovereigns (worth £1) and half sovereigns, locally minted copper trade tokens (suppressed in 1881, some state earlier[1]) and private bank notes.

After Federation in 1901, the Australian government assumed power over currency matters and began overprinting the private issues that were in circulation, in preparation for the issue of a domestic currency. In 1910 the federal government passed the "Australian Notes Act" which prohibited the circulation of State notes and gave control over the issue of Australian notes to the Commonwealth Treasury. Also passed in that year was the "Bank Notes Tax Act" which imposed a tax of 10% per annum on "all bank notes issued or re-issued by any bank in the Commonwealth after the commencement of this Act, and not redeemed". Both these acts remain on the statute books and perpetuate the de facto end of private currencies in Australia.

Currency adding machine c. 1910

The Australian pound: a national currency[edit]

In 1910 a national currency was introduced by the Labor Government of Prime Minister Andrew Fisher. The new national currency was called the Australian pound, consisting of 20 shillings, each consisting of 12 pence. Monetary policy ensured that the Australian pound was fixed in value to the pound sterling. As such Australia was on the gold standard so long as Britain was.

In 1914, the pound sterling was removed from the gold standard. When it was returned to the gold standard in 1925, the sudden increase in its value (imposed by the nominal gold price) unleashed crushing deflationary pressures. Both the initial 1914 inflation and the subsequent 1926 deflation had far-reaching economic effects throughout the British Empire, Australia and the world. In 1929, as an emergency measure during the Great Depression, Australia left the gold standard, resulting in a devaluation relative to sterling. A variety of pegs to sterling applied until December 1931, when the government set a rate of £1 Australian = 16 shillings sterling (£1·5s Australian = £1 sterling).

During World War II, the Empire of Japan produced currency notes, some denominated in the Australian pound, for use in Pacific countries intended for occupation. Since Australia was never occupied, the occupation currency was not used there, but it was used in the captured parts of the then-Australian territories of Papua and New Guinea.[2]

In 1949, when the United Kingdom devalued the pound sterling against the US dollar, Australian Prime Minister and Treasurer Ben Chifley followed suit so the Australian pound would not become over-valued in sterling zone countries with which Australia did most of its external trade at the time. As the pound sterling went from US$4.03 to US$2.80, the Australian pound went from US$3.224 to US$2.24.[3]

Decimalisation[edit]

In February 1959 the Commonwealth Government appointed a Decimal Currency Committee to investigate the advantages and disadvantages of a decimal currency, and, if a decimal currency was favoured, the unit of account and denominations of subsidiary currency most appropriate for Australia, the method of introduction and the cost involved.[4]

The Committee presented its report in August 1960. It recommended the date of introduction of the new system to be the second Monday in February, 1963.[4]

In July 1961 the Commonwealth Government confirmed its support of a decimal currency system, but considered it undesirable to make final decisions on the detailed arrangement that would be necessary to effect the change.[4]

On 7 April 1963 the Commonwealth Government announced that a system of decimal currency was to be introduced into Australia at the earliest practicable date, and gave February 1966, as the tentative change-over date.[4]

On 14 February 1966, a decimal currency, the dollar of one hundred cents, was introduced.[5]

Under the implementation conversion rate, £1 was set as the equivalent of $2. Thus, 10s became $1 and 1s became 10c. The conversion rate was problematic for the pre-decimal penny since the shilling was divided into twelve pence. An exchange rate of $2.40:£1 would have allowed for accurate conversion down to the penny, with one penny becoming one cent, however the Government thought it more important that the new currency unit be more valuable than the United States dollar which it would not have been under a 2.4:1 ratio.[citation needed]

Amounts less than a shilling were converted as follows:

Pence Accurate conversion Actual conversion   Pence Accurate conversion Actual conversion
½d 512c 0.417c   6½d 5 512c 5c
6d 5c 5c   12d (1s) 10c 10c

Coins[edit]

In 1855, gold full and half sovereigns (worth respectively one pound sterling and ten shillings) were first minted by the Sydney mint. These coins were the only denominations issued by any of the Australian mints until after Federation.

In 1910, .925 fineness sterling silver coins were minted in denominations of 3d, 6d, 1s and 2s (the last known as a florin). Unlike in the United Kingdom, no half crowns (worth 2s 6d) were issued. Bronze ½d and 1d coins followed in 1911. Production of half-sovereigns ceased in 1916, followed by that of sovereigns in 1931. In 1937 a crown (or five-shilling piece) was issued to commemorate the coronation of King George VI. This coin proved unpopular for actual use and was discontinued shortly after being reissued in 1938.

In 1946, the fineness of Australian silver sixpences, shillings, and florins was reduced to .500, a quarter of a century after the same change had been made in Britain. In New Zealand and the United Kingdom, silver was soon abandoned completely for the everyday coinage, but these Australian half-silver coins continued to be minted until after decimalization.

Banknotes[edit]

Numerous private banks issued paper money in Australia, starting with the issues of the Bank of New South Wales in 1817. Acceptance of private bank notes was not made compulsory by legal tender laws but they were widely used and accepted. The Queensland and New South Wales governments also issued notes. The Queensland treasury notes were legal tender in Queensland.

The first national issue of paper money consisted of overprinted notes from fifteen private banks and the Queensland government, issued between 1910-1914 in denominations of £1, £5, £10, £20, £50 and £100. They were overprinted with the words "Australian note". No £100 banknotes of this series are known to exist.[6]

In 1913 the first national banknotes were introduced in denominations of 10s, £1, £5, and £10. 1914 saw the introduction of £20, £50, £100, and £1000 notes. The £1000 note only saw limited circulation and was later confined to inter-bank use. Stocks were destroyed in 1969 and there are no uncancelled examples of this note known to exist in private hands.[7] There were two types of the never-issued 5s note, one around 1916 and the other 1946,[8][9] both had the reigning monarch and were later destroyed in 1936 and 1953, respectively.[8]

In the mid-1920s a modified 10s (worded as "Half Sovereign"), and reduced-size £1, £5 and £10 notes were issued with the side profile of King George V on the face. These notes still referred to the currency's convertibility to gold on demand. A newer £1000 note with the profile of George V was also prepared but never issued. An unissued printer's trial of this note was discovered in London in 1996 and subsequently sold for a sum in excess of $200,000. Nonetheless, this note is not recognised as a legitimate Australian banknote issue.

Just after the start of the Great Depression in 1933, Australian currency ceased to be redeemable for gold at the previously maintained rate of one gold sovereign for one pound currency. Subsequently a new series of Legal Tender notes were designed, once again bearing the portrait of King George V, in denominations of 10s, £1, £5 and £10. These denominations and designs were maintained and modified to accommodate the portrait of King George VI in 1938. For both issues £50 and £100 specimens were prepared, but were not issued.[citation needed]

An uncirculated fifty-pound note

The coronation of Queen Elizabeth II in 1953 saw the issue of a new portrait series of prominent persons in Australia's history.

Unissued notes that were printed but never issued for circulation include two different 5-shilling notes, a 1916 with stock destroyed in 1936, and a 1946, stock destroyed in 1953. Both were printed with the reigning king's portrait. Two fifty-pound notes were designed, one from 1939 with King George VI and a 1951 as stated above. Both stocks of the £50 note were destroyed in 1958. A 1939 £100 also exists with a brown, green and pink colouration, with stock destroyed in 1958 as well. The last unissued note was a £1000, with specimens arriving in 1923 and kept till 1928 after a decision not to use the denomination any further. The reserve bank holds specimens of all the stated banknote denominations.[10]

See also[edit]

References[edit]

  1. ^ Pitt 2000, pp. 10–11
  2. ^ The Commonwealth Bank and the note issue: 1920–1960
  3. ^ Historical rates derived from Tables of modern monetary history: Australia, Tables of modern monetary history: Asia (India's section), and Foreign Currency Units per 1 U.S. dollar, 1948-2005, PACIFIC Exchange Rate Service. Each source may contradict one another. The rates above are the "most plausible facts" derived from these web pages.
  4. ^ a b c d Commonwealth of Australia (1963). "Chapter 20. Private finance" (pdf). Year Book Australia. Retrieved 12 Jul 2013. 
  5. ^ Department of Foreign Affairs and Trade (Nov 2009). "Our currency". About Australia. Commonwealth of Australia. Retrieved 12 Jul 2013. 
  6. ^ Renniks 2000, p. 134
  7. ^ Renniks 2000, p. 157
  8. ^ a b Renniks 2000, p. 160
  9. ^ Museum of Australian Currency Notes Timeline: 1901-1920
  10. ^ Ian W. Pitt, ed. (2000). Renniks Australian Coin and Banknote Values (19th ed. ed.). Chippendale, N.S.W.: Renniks Publications. ISBN 0-9585574-4-6. 

External links[edit]

Preceded by:
Pound sterling
Ratio: at par
Currency of Australia
1910 – 1966
Succeeded by:
Australian dollar
Reason: decimalisation
Ratio: 2 dollars = 1 pound