Australian pound


The Australian pound 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, each of 12 pence.

History

The establishment of a separate Australian currency was contemplated by section 51 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 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.

Paper currency

The Fisher Government's Australian Notes Act 1910 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. 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.
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 note, with the serial number P000001, was the first piece of currency to carry the Coat of Arms of Australia.

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 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.

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.

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.

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.
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. 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. 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. On 14 February 1966, a decimal currency, the dollar of one hundred cents, was introduced.
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.
Amounts less than a shilling were converted as follows:
PenceAccurate conversionActual conversion PenceAccurate conversionActual conversion
dc0.417c dc5c
6d5c5c 12d 10c10c

Coins

In 1855, gold full and half sovereigns 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.
In 1910,.925 fineness sterling silver coins were minted in denominations of 3d, 6d, 1s and 2s. Unlike in the United Kingdom, no half crowns were issued. Bronze d and 1d coins followed in 1911. Production of half-sovereigns ceased in 1916, followed by that of sovereigns in 1931. In 1937 a crown 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

Examples of private issue paper currency in New South Wales exist from 1814. Denominated in Pounds, these private banker and merchant scrip notes were used in Sydney and Hobart through 1829. Private issue banknotes were issued between 1817 and 1910 in denominations ranging from 1 to 100 pounds. 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.

Footnotes