Four different currencies have graced Australia's history. In the wild days anything went. The government eventually had to step in. They thought imposing a uniform currency on Australians would create economic stability. History proved them wrong. Extreme measures had to be taken to combat the volatility of the Great Depression.
• Bank Notes in Australia
• Pound Sterling in Australia
• Australian Pound
• Depression and Australian Monetary Policy
• Australian Dollar
Imagine anyone being able to use his or her own unique currency. These are "Mikes" dollars. This situation was the case in the early years of the Australian Federation. Private bank notes were widely used and accepted. Not only could individuals create their own currency but individual states could as well. Queensland treasury notes were in circulation in Queensland. The implications for trade were dire. An exporter selling goods to Australians would certainly not want currency only valid in such a small region. In 1910, the government effectively ended the reign of private currencies. The Australian Notes Act flat out prohibited the circulation of state notes. Private bank notes were dealt with in a much stranger manner. The government put a 10% tax per year on all banks notes. Well people did not much like the idea of losing 10%. So, in fact, this act did have the effect of putting such a damper of bank note use that it was effectively ended.
1910 was also the year Australia entered into the era of the Australian Pound. The Australian pound was introduced by Prime Minister Andrew Fisher's labor department. Each Australian Pound was broken down into 20 Shillings. Each shilling was broken down into 12 pence. To stabilize the currency, Fisher yoked the Australian Pound to the British Pound Sterling.
Britain was at that time on the gold standard. By default Australia was on the gold standard as well. In 1919 Britain took the Sterling off the gold standard - Australia followed suit. However, come 1926, Britain decided once again to return to the standard of gold. With the return of the valuable -high priced- gold standard came crushing deflationary pressure. Britain had let the Shilling loose value during the years when the currency was removed from gold. The effects of this huge deflation not only permeated Australia but all remnants of the British empire throughout the world. In January 1931 Australia took action against the deflation. Let us not forget that by this time, Australia was in the midst of the Great Depression. Prime Minister James Scullin lowered the Australian Pounds value against the English Pound by 25%. This devaluation took some of the edge off of the Great Depression for Australians.
The current Australian Dollar was introduced on February 14, 1966. This is a decimal currency. Effective with the introduction of the new dollar (AUD) was detachment from the British Sterling system. For the first time in Australia's history, Australia's currency was not linked with Britain's. Instead of continuing to measure its currency against Great Britain, Austrian matched the value of the Australian Dollar with the US Dollar. Several years later this moved proved beneficial. In 1967, as the Sterling slid, the Australian Dollar remained comfortable secure with the USD.
