Some people are good at describing a problem. Other people are good at devising solutions. A few people (known as geniuses) can actually match correctly a problem with the right solution. The rest of us are just windbags.
In Part 1 of this blog, I pictured the arrival of Lachlan Macquarie as the new Governor of New South Wales in December 1809.
Macquarie was probably feeling a little despondent on his first night in the colony. Sydney was lacking in well-made streets, law and order, judges, court-houses, and money. The last deficiency probably hurt the most, if he was partial to sticky buns sold by street vendors. Macquarie had packed a regiment of soldiers with his spare underwear, but not trunks full of guineas, crowns, shillings, pennies and farthings. Nor did he pack spare kegs of rum to serve as petty cash.
Fortunately for the future history of Australia, Macquarie endeavoured to tackle most of these issues before finishing his tenure as the longest serving Governor of New South Wales.
The shortage of money was not unique to the British Colony of New South Wales in 1809. It was a worldwide shortage. National economies were busy doing what economies do – trading goods and services, and making some people rich and other people poor. But national governments did not consider it a priority to print bank notes or mint coins sufficient to support normal business transactions. Therefore any coin, regardless of its national origin, could be traded anywhere based upon its precious metal content. A silver coin was a silver coin, and a copper coin was a copper coin, regardless of which monarch’s head appeared on the front. And in the 18th and early 19th Centuries, Spanish silver dollars were traded world-wide, reflecting the huge volumes of silver extracted from the Spanish territories in the Americas.
And so Macquarie sent for silver dollars. In November 1812, 40,000 Spanish dollars arrived via the British East India Company in Madras. But a silver dollar was a high value coin. So, not lacking talented convicts and former convicts, Macquarie employed a forger (who else?) to stamp out the middle of every coin. The middle (the ‘dump’) was valued at 15 pence (1 shilling and 3 pence), and the outer rim (the ‘holey dollar’) was valued at 5 shillings. Two coins were produced from one coin, and the combined value was greater than an unadulterated Spanish dollar (very clever).
The holey dollars and dumps did not solve all the Colony’s currency problems. But they helped to stabilise the local economy. Eventually sterling coinage was sent out from Britain. Between 1822 and 1829, the holey dollars and dumps were replaced with sterling.
Unfortunately, Lachlan Macquarie did not live to see the fruits of his labours. He was eventually hounded from office after making many enemies. Apparently his many achievements were not universally popular outcomes: introducing the rule of law, constructing public buildings, establishing a currency, sponsoring exploration missions to cross the Blue Mountains and building a society that welcomed former convict and free settler alike. Macquarie died in London in 1824.