Editor's note»

The Argus, Thursday, June 9, 1932, page 6.

Although many people who handle currency notes daily could not recite offhand the terms in which the Federal Treasurer promises redemption of the note issue, the wording was determined only after careful thought, and it has withstood the test of time. Recent Commonwealth legislation1 necessitates a fundamental change in the inscription on the note.

When the first act was passed providing for the issue of Australian notes, the Federal Treasury controlled the issue and the Treasurer promised to pay the amount of the gold coin on demand at the Treasury of the Commonwealth. In 1920 the control of the note issue was transferred to the Commonwealth Bank, and the promise to pay by the Treasurer was altered to read “in gold coin on demand at the head office of the Commonwealth Bank of Australia.” In those days Australia, like the rest of the world, was on the gold standard, and few people, excepting tourists, ever troubled about exchanging notes for gold. Notes were lighter and more easily carried. Then the war came, world-wide expansion of credit followed, and gold became dearer, until eventually the gold standard was more of a tradition than an actual factor in currency. In such circumstances the promise to pay gold for notes was regarded as a polite fiction. It became a very empty promise when an act was passed which gave the Commonwealth Bank the power to call upon persons or banks or other institutions to yield up any gold coins in their possession, and to take Australian notes in exchange. The stability of the Australian note has not been affected by these changes. Backed by the credit of the Commonwealth the note does all that could be required of any token for internal currency purposes. Sooner or later, however, the promise to pay in gold will have had to be modified because of the recent amendment of the law under which the Commonwealth Bank operates. This provides that the reserve backing of the note issue may be held in either “gold” or “sterling.” Sterling is British currency, but not necessarily gold.

The question now being considered is the form which the new inscription on the Australian note will take. The Commonwealth Bank will probably make a departure on common-sense lines. It may say something to this effect: “This note is legal tender for (the amount stated on the note) in the Commonwealth and in the territories of the Commonwealth, and in the Mandated Territories thereof.” A new note issue will necessitate the gradual withdrawal of all notes current, but old and new current will remain equal for legal purposes. The work of preparing for the printing of the new notes is already in hand, but it is unlikely they will be ready for issue for some months. Probably January 1, 1933, will be the official date for the discontinuing the issue of notes in their present form and for the beginning of the issue of the new notes.

  1. The Commonwealth Bank Act of 1932.
This is the pinnacle of bad journalism. If you can read it without noticing any naïveté from the anonymous author, you need a good thumping.Powered by Hackadelic Sliding Notes 1.6.5