Commerce and Trade Commerce and Trade

‘I beg, therefore. to propose to Your Lordship’s consideration the Establishment of a Government Colonial Bank, under the name of “The New South Wales Loan Bank”.’
Lachlan Macquarie, 1810

Macquarie’s term saw a period of promising economic growth. However, currency was in such short supply that barter and promissory notes had become the principal means of exchange.

In 1813, in order to remedy the situation, Macquarie had the centres punched out of 40,000 Spanish dollars, thus doubling the number of coins. The outer ring (holey dollar) and the centre (dump) became the first distinct coins of the colony. They remained in circulation until 1829.

Stabilising the Economy

Macquarie took further action to stabilise the colony’s precarious monetary system. In the face of opposition from the Colonial Office, he sanctioned the establishment of the colony’s first bank. At Macquarie’s invitation 14 leading settlers met and subscribed £20,000 pounds for a limited liability bank.

The Bank of New South Wales, financed by private subscription, opened for business on 8 April 1817.

By 1822 commerce and trade had prospered to such an extent that Macquarie could confidently predict that ‘this Colony will, at no very distant period, vie in trade and opulence with many others in His Majesty’s Dominions.’

Lachlan Macquarie. Extract from Dispatch to Lord Liverpool, 18 October 1811 (Historical Records of Australia)

In order to solve the problem of the colonial currency, the lack of which was hampering commerce and trade, Macquarie makes a proposal to establish a government bank.

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