VII - THE CURRENCY

Summary

The extraordinary condition of the currency when Brisbane assumed office did not escape his attention, but it was obvious that the evil could not be cured without the application of measures that would strongly affect vested interests. During the years 1814 to 1821 there had been a gradual rise of about 25 per cent in the value of English bank notes, which had of course enhanced to the same extent the value of the Treasury Bills, drawn in Sydney on London, which were payable in them. The whole basis of the New South Wales currency rested ultimately upon the exchange value between that currency and the Treasury Bills, but as no attempt had been made to adjust the rate of exchange to the improved value of those bills—the Government still accepting the dollar as equivalent to 5s.—the country reaped no benefit from the resumption of cash payments in its colonial transactions. The rise in value of the Bank of England note had had the effect of reducing the value of the dollar in England to 4s. 2d., and it was therefore a profitable speculation to ship dollars to New South Wales, where they could be exchanged for Treasury Bills at the rate of 5s. At the beginning of 1822 a very large importation of dollars took place, two ships bringing about 80,000, while others brought smaller quantities, making the total importation in that year equal to the average value of the bank notes in circulation in the colony.