Australian museum buys 1 holey dollar for $130,000

New South Wales holey dollarThe National Museum of Australia spent AUS$130,000 (hammer price AUS$111,000) to acquire a rare 1813 “holey dollar,” Australia’s first official minted currency, at the International Auction Galleries’ Australian & World Rare Coin auction on November 6th. There are only 300 or so holey dollars extant and this particular piece is one of only five which originated from Potosi, Bolivia. The rest are all Mexican silver.

The holey dollar was an ingenious solution to the severe shortage of coinage in the colony of New South Wales. Founded in 1788 by 1,487 British expatriates (778 of them convicts), the colony was so short on coin that rum was used as currency. The New South Wales Corps, the permanent local regiment that was supposed to maintain order, quickly became known as the Rum Corps due to their extra-legal control of the rum trade. In 1805 Governor William Bligh, the same William Bligh who had been captain of The Bounty until Fletcher Christian led a successful mutiny against him, tried to stop the Corps’ rum trade. The Corps responded with the Rum Rebellion of 1808, wherein William Bligh was forcibly deposed from yet another leadership position by underlings he could not control.

Lachlan Macquarie, by Richard  Read, 1822For the next two years the Corps ran the colony as they willed, until the arrival of Governor Lachlan Macquarie at the end of 1809. He was tasked with arresting the leaders of the Rum Rebellion and reclaiming political and military control of the colony from the New South Wales Corps. In 1812 the British government sent Macquarie £10,000 in Spanish dollars. Heavy in pure silver and worth eight reales, these Spanish pieces of eight had been used worldwide for currency since they were first struck in 1497. In Australia in 1812 their worth was fixed at five shillings.

1796 Spanish DollarInstead of releasing them into general circulation where they would be spent on goods arriving on merchant trade ships from all over the world and thus leave the colony almost as quickly as they arrived, Macquarie decided to solve the currency crisis by making these Spanish dollars a New South Wales currency. In keeping with his liberal policy of appointing emancipists (freed or pardoned convicts) to government jobs, Macquarie hired convicted counterfeiter William Henshall to punch holes in the Spanish dollars and overstamp both the outer pieces and the inner plugs (known as “dumps”) as NSW currency.

Macquarie provided Henshall with a workshop in the basement of a building known as ‘The Factory’ to make the holey dollars and dumps. This building, used by government printer George Howe, was near the corner of Bridge and Loftus streets, by the eastern bank of the Tank Stream. It was effectively Australia’s first mint, with Henshall Australia’s first mint master.

New South Wales dumpMacquarie initially anticipated that the task of converting the 40,000 Spanish coins would take three months, but the project took over a year to complete. Henshall had to experiment with making the necessary machinery, which proved difficult. It seems that a drop hammer, as opposed to a screw press, was used to stamp the coins. Henshall stamped the coins with their new value and ‘NEW SOUTH WALES 1813’. He incorporated his ‘H’ initial into the spray of leaves of the counterstamp design and also inscribed his initial between the words ‘FIFTEEN’ and ‘PENCE’ on the dump reverse dies.

(The dump pictured above left is from a holey dollar cast of out a 1773 piece of eight in the State Library of New South Wales).

This move doubled the number of coins in circulation, increased their worth by 25% and ensured that the money would not leave the colony. The holey dollars and dumps remained in circulation until 1822, when the government was able to supply sufficient sterling coinage to recall the holey ones. By 1829, most of the 40,000 holey dollars had been exchanged for legal tender. The government melted them down for bullion. Only a few collectors kept the holey dollars and dumps, which is why there are only 300 of the former left and about 1000 dumps.

The National Museum’s holey dollar will probably go on display in the Landmarks: People and Places across Australia gallery in 2013, along with other artifacts from the Macquarie era.