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Australian pound

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Australian pound
AUS-4d-Commonwealth of Australia-One Pound (1918).jpg
One poundsixpence
Unit
Plural 
Symbol£‎
Denominations
Subunit
 1⁄20shilling
 1⁄240penny
Plural
 pennypence
Symbol
 shillings
 pennyd
Banknotes
 Freq. used10s, £1, £5, £10
 Rarely used£20, £50, £100, £1000
Coins1⁄2d, 1d, 3d, 6d, 1s, 2s
Demographics
Date of introduction1910
Date of withdrawal14 February 1966
Replaced byAustralian dollar
User(s)Australia
Issuance
Central bankReserve Bank of Australia
Valuation
Pegged withBritish pound at par, and then A£1 = GB 16s (£0.8)
Pegged byNew Guinea pound at par

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

History

Main article: History of Australian currency

The establishment of a separate Australian currency was contemplated by section 51(xii) of the Constitution of Australia, which gave Federal Parliament the right to legislate with regard to "currency, coinage, and legal tender".

Establishment

Coinage

The Deakin Government's Coinage Act 1909[1] distinguished between "British coin" and "Australian coin", giving both status as legal tender. The act gave the Treasurer the power to issue silver, bronze and nickel coins, with the dimensions, size, denominations, weight and fineness to be determined by proclamation of the Governor-General. The first coins were issued in 1910, produced by the Royal Mint in London.[2]

Paper currency

City Bank of Sydney in Australia cancelled £20 banknote
Commonwealth of Australia, One Pound (1918).[nb 1]

The Fisher Government's Australian Notes Act 1910[4] gave the Governor-General the power to authorise the Treasurer to issue "Australian notes" as legal tender, "payable in gold coin on demand at the Commonwealth Treasury". It also prohibited the circulation of state notes and withdrew their status as legal tender.[2][5] In the same year the Bank Notes Tax Act 1910 was passed imposing a prohibitive 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", which effectively ended the use of private currency in Australia.

As a transitional measure lasting three years, blank note forms of 16 banks were supplied to the government in 1911 to be overprinted as redeemable in gold and issued as the first Commonwealth notes. Some of these banknotes were overprinted by the Treasury, and circulated as Australian banknotes until new designs were ready for Australia's first federal government-issued banknotes, which commenced in 1913.[5]

In May 2015, the National Library of Australia announced that it had discovered the first £1 banknote printed by the Commonwealth of Australia, among a collection of specimen banknotes. This uncirculated Australian Pound (£1) note, with the serial number (red-ink) P000001, was the first piece of currency to carry the Coat of Arms of Australia.[6]

Gold standard

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).

World War II

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.[7]

Post-war devaluation

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.[8]

Decimalisation

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.[9]

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.[9] 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.[9] 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.[9] On 14 February 1966, a decimal currency, the dollar of one hundred cents, was introduced.[10]

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
1⁄2d 5⁄12c 0.417c   6+1⁄2d 5+5⁄12c 5c
6d 5c 5c   12d (1s) 10c 10c

Coins

Main article: Coins of the Australian pound

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 non-Imperial denominations issued by any of the Australian mints until after Federation (the Sydney Mint struck Imperial gold sovereigns and half sovereigns starting in 1871, and the Melbourne Mint starting 1872).

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 1⁄2d 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

Main article: Banknotes of the Australian pound

Examples of private issue paper currency in New South Wales exist from 1814 (and may date back to the 1790s).[11] Denominated in sterling (and in some cases Spanish dollars), these private banker and merchant scrip notes were used in Sydney and Hobart through 1829.[12] Private issue banknotes were issued between 1817 and 1910 in denominations ranging from 1 to 100 pounds.[13] In 1910, superscribed banknotes were used as the Commonwealth's first national paper currency until the Treasury began issuing Commonwealth banknotes in 1913. The Commonwealth Bank Act of 1920 gave note-issuing authority to the Commonwealth Bank.

See also

Footnotes

  1. ^ The Pound (in banknote form) was first issued in Australia in 1910 by a limited number of Australian chartered banks. The first year of issue for the Commonwealth of Australia Treasury Note pound was 1913. The pictured note is from the 1913 Second Issue (printed in 1918).[3]

References

  1. ^ Coinage Act 1909. Federal Register of Legislation. Retrieved 6 April 2020.
  2. ^ a b Tilley, Paul (2019). Changing Fortunes: A History of the Australian Treasury. Melbourne University Publishing. ISBN 0522873898.
  3. ^ Cuhaj, George S. (2010). Standard Catalog of World Paper Money General Issues (1368–1960) (13 ed.). Krause Publications. ISBN 978-1-4402-1293-2.
  4. ^ Australian Notes Act 1910. Federal Register of Legislation. Retrieved 6 April 2020.
  5. ^ a b Reserve Bank of Australia, "History of Banknotes"
  6. ^ Jordan Hayne (5 May 2015), "National Library finds Australia's first pound note, thought to be lost for nearly 80 years", ABC News Online
  7. ^ "The Commonwealth Bank and the note issue: 1920–1960" Archived 1 April 2010 at the Wayback Machine
  8. ^ 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.
  9. ^ a b c d Commonwealth of Australia (1963). "Chapter 20. Private finance". Year Book Australia. Retrieved 12 July 2013.
  10. ^ Department of Foreign Affairs and Trade (November 2009). "Our currency". About Australia. Commonwealth of Australia. Retrieved 12 July 2013.
  11. ^ Pitt 2013, p. 158.
  12. ^ Pitt 2013, pp. 158–59.
  13. ^ Pitt 2013, pp. 163–175.

Sources

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