Before Federation: To 1900
Gold and the Age of the Bank Note
The mining of gold from the 1850s set off a long period of prosperity. Immigration increased rapidly. The population tripled to three million between 1858 and 1889. The economy diversified. Urbanisation continued with two thirds of the population living in towns by the late 1880s. Melbourne was the largest city during this time. The discovery of gold led to the minting of Australia's own gold coins.
In 1853, Queen Victoria consented to the establishment of a branch of the Royal Mint in Sydney. Branches of the Royal Mint were also established in Melbourne in 1872 and in Perth in 1899.
The first mint was set up in part of Sydney's Rum Hospital (in 1855 in Macquarie Street across from today's Reserve Bank).
Australia's first gold sovereigns and half sovereigns were turned out in 1855. By the late 1870s, Sydney and Melbourne gold coins were accepted as legal tender in Britain and most other colonies using British coin.
The gold rushes spurred the development of banking and the issue by commercial banks of bank notes backed by gold. The public, however, was often wary of these notes, and they did not circulate widely. These bank notes did not constitute a national paper currency.
In 1851 there were eight trading banks and 24 branches. By 1890, 33 new banks had been launched and the number of branches exceeded 1500.
Credit expanded rapidly, generating a speculative boom during the 1880s. A depression followed in the 1890s.
Many of the banks which had developed during the gold rush years failed in 1893. Though most reopened, this major banking crisis reduced confidence in private bank notes.
The bank failures resulted in the Queensland Government withdrawing the right to issue notes from banks in Queensland. It substituted them with Queensland Treasury legal tender notes.
The crisis in the early 1890s, produced calls for a national or central bank, uniform banking laws and a national currency. The politics of Federation, however, were the main focus of those days and these banking and currency matters were left unresolved.
Australia's currency remained a mixture of British copper, silver and gold coins, such as this 1901 sovereign (£1), Australian gold coins and the notes of private banks and the Queensland Government well into the period following Federation.
