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Did we stop minting Australian gold sovereigns after 1931? What happened?
I admit I know very little about the history of sovereigns and only realized today that Australian sovereigns seem to stop at 1931.
From memory maybe something to do with the amendment to the Commonwealth bank Act of 1911-1929, basically it was to do with the amount of gold reserves the commonwealth bank was meant to hold in reserve to back their legal tender. You'll notice that old Commonwealth bank notes from 1901 until sometime I can't remember were redeemable for gold, that stopped. Over the period from 1901 until 1931 the amount of gold held in reserve as a ratio of gold/legal tender was watered down as the government started to run out of money.
"Every day is ordinary, until it isn't."
Cleaning my computer and found this. I wrote it for a website I used to have on pre-decimal notes a few years back:
Britain exits the Gold Standard
Great Britain left the Gold Standard on the 21st of September 1931, I could not find any reference to the exact date that Australia also left the gold standard, but assume that it may have been on that date also because:
The Australian currency when introduced in 1909 was identical in value to the Sterling until it was stabilised (due to the gradual depreciation of the Aussie £ from the beginning of 1930) at £125 Australian = £100 Pound Sterling on the 31st of December 1931. In September 1931, Australian Mints ceased to produce gold sovereigns.
Now in those days we didn't have a Reserve Bank of Australia, but thankfully and you may detect my sarcasm, the sky didn't fall in because we had the Commonwealth Bank. It wasn't until 1959 that the Reserve Bank was established.
Australia's official gold reserves
So how much gold did we have in the Treasury coffers when Australia left the gold standard in 1931?
I wouldn't have a clue. I've searched and searched and searched but couldn't find any reference to an exact amount but according to some sources we sold a huge proportion of our gold up until about the mid-1930's.
I do know however that the Australian Notes Act of 1910 provided that Treasury should hold gold coin in reserve of an amount no less than ¼ of the total value of notes on issue up to $14 000 000, and an amount equal to any excess over $14 000 000. This was amended in 1911 so as to require Treasury to hold an amount of not less than ¼ of the total notes on issue. And because we had some fairly onerous debt issues overseas (probably because we were forced to bail out Britain's arse in WW1), and shedloads of gold were being sent overseas to meet our interest obligations for loans, an amendment to the Commonwealth Bank Act in June 1931 provided for the reduction of the gold reserves on a temporary basis until June 1933 of no less than 15%. The Reserve was to be incrementally increased to 25% by June 1935, but surprise surprise, in May 1932, a further amendment to the Commonwealth Bank Act provided that the reserves may be held in gold or English Sterling or a bit of each.
So in the space of one short year since the abandonment of a gold standard, the Commonwealth's legal obligation to hold gold in reserves had been watered down, eroded away and legislated into insignificance. After all, if you were going to abandon a gold standard, it made no sense to hoard any of it when it could be sold for a good price to those barbaric nations that still considered it to be a commodity of worth.
But in reality, whilst we had a gold standard up until 1931 that established that an Australian pound was specified as equivalent to 113 002 grains of fine gold and that correlation with gold existed even up until the introduction of decimal currency in 1966 when the Australian pound was valued at 30.72 grains - we were using nothing more than dirty stinking fiat. It was unbacked currency. Even those notes that promised that the Treasurer would redeem on demand an equivalent in gold coin if the notes were presented to the Head Office of the Commonwealth Bank were a token, a fib, a lie. A furphy based upon wishful thinking, human nature and the assumption that it would be highly unlikely that ¼ of all notes on issue would be redeemed for gold coin, let alone all the notes on issue.
So why did they produce "gold-bearing" bank notes? In order to generate credibility and get the public to accept the fledgling Commonwealth's paper and metal tokens as value.
Edit to add: I think that $14 000 000 should be Pounds, not certain, can't remember.
Last edited by mmm....shiney! (2016-02-29 19:22:17)
"Every day is ordinary, until it isn't."