By AG | Monday, 15 September 2003
Before 1910, the issue of banknotes had been in the hands of approximately fifty private banks for a period of over 90 years. Mergers, absorptions and failures had reduced the number of issuing banks significantly by the beginning of the 20th century, particularly as a result of a financial crisis which occurred in 1893.
There were three exceptions to the private banknote issues during that period. In 1866, a financial crisis led the Queensland Government to issue its own notes. These were subsequently withdrawn in 1869. In 1893, the New South Wales Government issued Treasury Notes to overcome financial problems which arose when many banks suspended payments during a severe financial crisis. The issue was very limited. In the same year, the Queensland Government became the sole note issuing authority in that state. This was to continue long past Federation. Their issue was finally prohibited by the Commonwealth Banking Act of 1910.
At a rally in 1909, a hasty promise was made that "if elected, Australia would have its own currency". Once elected, the government realised that the easily made promise would not be easy to fulfill.
The Australian Notes Act was proclaimed on 1st November, 1910. The Government did not possess the machinery, materials or knowledge to issue its own notes straight away. As an interim measure, unused banknote forms were purchased from 16 private banks and the Queensland Government. Each was overprinted as an 'AUSTRALIAN NOTE' with a promise to pay in gold. These issues are now referred to as superscribed notes.
The superscribed notes continued to circulate until government designed and printed notes were finally released in 1913. From that time, the superscribed notes were gradually withdrawn as more and more quantities of the new notes became available.
Prior to the Commonwealth issues, the States levied a 2% tax on private banknote issues. After allowing for this tax, historians estimate that the banks made a 2½ to 3% profit by lending out part of the funds represented by their note issues. The private banks were still legally able to print and issue banknotes, a right which existed until the Commonwealth Bank Act of 1945. The Commonwealth Government, however, was not keen to have an alternative to its new note issues. To ensure a proper footing, and to make the new note issues successful against private competition, a hefty 10% taxation levy, imposed in the 1910 legislation on private banknote issues, made the practice prohibitively expensive and effectively killed off all other note issues.
The new Commonwealth Notes were issued in eight denominations - Ten Shillings (10/-), One Pound (£1), Five Pounds (£5), Ten Pounds (£10), Twenty Pounds (£20), Fifty Pounds (£50), One Hundred Pounds (£100) and One Thousand Pounds (£1000).
A competition, announced on 5th November, 1910, was held to design the 10/-, £1 and £5 notes. The winners were announced on 1st April, 1911. See the Federal Currency Note Competition article for more information. Despite the competition, the designs on the first Commonwealth notes evolved from consultations between Prime Minister Fisher, Treasurer Allen and the London based banknote printing firm of Bradbury, Wilkinson and Co. It was this firm which prepared the master plates. A printing factory was set up at the King's Warehouse, Flinders Street Extension, Melbourne in 1912 with Thomas S Harrison as manager. The imprint T S Harrison, Australian Note Printer would appear on Australian notes well into the mid-1920's.
The four lower denomination notes began to appear in 1913 while the higher denominations (£20, £50, £100 and £1000) did not issue until the following year. The front design of all eight notes gave an overall blue impression because of the ink used in the intaglio printing of the borders and text. The basic features of the design were an imperial crown, a coat-of-arms, heading text, two signatures, the value displayed a number of times and two panels in which serial numbers could be printed later. The text on each note read:
The Treasurer of the Commonwealth of Australia Promises to Pay the Bearer (denomination) in gold coin on Demand at the Commonwealth Treasury at the seat of Government.
Signatories were Jas. R. Collins, Assistant Secretary, and Geo. T. Allen, Secretary to the Treasury.
The notes were made from a very fine quality linen paper which was capable of absorbing secretly formulated inks. The ink penetrated beneath the surface, but did not soak through to the other side, producing a design which could not be altered or obliterated without easily being detected. Three colours of ink were used on each side, applied in up to seven separate printing runs, to produce a design which could not be colour-separated or counterfeited by means of photography.
Thousand pound notes were quickly withdrawn from circulation and by 1915 were used exclusively for settlement transactions between the banks.
For the first ten years, note issue was the responsibility of the Commonwealth Treasury. In 1920, a new Commonwealth Bank Act transferred this responsibility to the Commonwealth Bank.
A Note Issue Department was set up to manage the process, headed by a Board chaired by the then Governor of the Commonwealth Bank, Denison Miller. One of the new board's first decisions was to issue redesigned notes on specially watermarked paper. A basketweave watermark pattern was chosen together with the words COMMONWEALTH OF AUSTRALIA and a symbol of the note's value. The new notes were issued in 1923, commencing with the £1. In 1924, the Board was disbanded and responsibility for note issue was transferred to the Board of Directors within the Commonwealth Bank. The titles of the signatories of the notes through this period reflect these changes.
By 1921, intaglio printing had replaced surface printing for the design detail. The lines engraved on the printing plate were actually minute channels about one thousandth of an inch deep. The plate was inked, then the excess was wiped off, leaving ink only in the channels. The plate was then applied to the note paper under high pressure to force the fabric of the paper into the inked channels. The channels were engraved by means of a special Geometric lathe which could inscribe patterns which were so complex that they could not be exactly reproduced by counterfeiters.
The signatures appearing on notes printed up until the mid-1920's were engraved on the block. This meant that a new block had to be engraved each time the signature combination changed. After the death of Denison Miller in 1923, signatures were no longer engraved, but were added later, in a separate printing run. The result was that signatures no longer appeared in the same colour as the design of the note, but in black.
During 1924, the note printing operation was moved to new premises at Victoria Parade, Fitzroy, a suburb of Melbourne. Note production was to be undertaken here for the remainder of the pre-decimal series and well into the decimal era - 56 years - until relocation to the current premises at Craigieburn, 23 km from the centre of Melbourne, in the early 1980's.
In 1929, consideration was given to extending the use of paintings for the reverse designs of Australia's notes. The £1 had carried a scene of Captain Cook's landing since 1923. Eventually the idea was dropped and a Melbourne sculptor, Paul Raphael Montford, was commissioned to prepare a series of clay models based on themes of pasture, agriculture, manufacturing, commerce, dairying and mining. The models were engraved as bas-relief panels with the first to appear being the Manufactures design on new, smaller ten shilling notes in July, 1933.
The £1 note, with a pastoral, sheep tending design was issued in August, 1933, followed by commerce on the £5 in December, 1933 and agriculture, wheat farming on the £10 in October, 1934. The designs, unpopular with many and ridiculed in the press from time to time, survived until new notes were prepared after Elizabeth became Queen.
The historical significance of the new notes was in their wording. The text read:
This Note is legal tender for (denomination) in the Commonwealth and in all Territories under the control of the Commonwealth.
The legal tender status signified an end to the gold standard, the notes were no longer backed by gold reserves and were no longer redeemable for gold.
The £20 note was not redesigned. Issue of the denomination ceaced in 1938 after it had become clear that there was little need for higher value notes whose main use was seen almost exclusively on the nation's racetracks. £50 notes with a commerce bas-relief and £100 notes with dairying were printed in 1939 but never released. Except for a few specimens, both series were destroyed in 1958.
In 1948, in an effort to reduce costs, the note printing branch began to use an American technique for the replacement of printer spoils. Notes destroyed in the printing process were no longer replaced with identically numbered notes, but with notes from a separate print run. The substitute notes had a five digit number with a five pointed star or asterisk at the end. On the changeover to decimal currency in 1966, a six pointed asterisk replaced the star and a prefix of Z was added. With newer printing innovations, the practice was stopped in 1972.
The inclusion of portraits in the designs on Australian notes prior to 1953 was limited. A number of trials, such as the unissued 5/- note of 1916, had led to nothing. Commencing with the £1 note in October, 1953, the Queen's portrait appeared on the front. On the back, explorers Charles Sturt and Hamilton Hume complemented the watermark of Captain Cook in a series of circles.
The bas-reliefs of the Queen and the Australian arms were designed by sculptor William Leslie Bowles. He and artist Mervyn Napier Wallace collaborated in the designs which appeared on all the new notes. The £10 was released in June, 1954 and both the £5 and 10/- in July, 1954.
In 1959, a new Reserve Bank Act transferred responsibility for note issue to the newly created Reserve Bank of Australia. This led to a change in Dr Coombs title on the notes from Governor, Commonwealth Bank of Australia, to Governor, Reserve Bank of Australia.