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In 1901 notes in circulation in Australia consisted of bank notes payable in gold coin and issued by the trading banks, and Queensland Treasury notes. Bank notes circulated in all States except Queensland, but were not legal tender except for a brief period in 1893 in New South Wales. There were, however, some restrictions on their issue or other provisions for the protection of the public. Queensland Treasury notes were issued by the Queensland Government and were legal tender in that State. Notes of both categories continued in circulation until 1910, when the Australian Notes Act 1910 and Bank Notes Tax Act 1910 were passed by the Commonwealth Parliament. The Australian Notes Act 1910 prohibited the circulation of State notes as money and the Bank Notes Tax Act 1910 imposed a tax of ten per cent per annum on 'all bank notes issued or re-issued by any bank in the Commonwealth after the commencement of this Act, and not redeemed'. These Acts put an end to the issue of notes by the trading banks and the Queensland Treasury. The Reserve Bank Act 1959 expressly prohibits persons, including from issuing bills or notes payable to bearer on demand and intended for circulation.
The Act came into force on 14 February 1966, and notes of $1, $2, $10, and $20 denominations were issued forthwith as legal tender to any amount throughout Australia. A description of these notes is published in Year Book No. 52, page 678.
On 29 May 1967 $5 notes were issued throughout Australia and the Territory of Papua and New Guinea. The $5 note was designed by Gordon Andrews, the designer of the other dollar notes already in circulation. On the front is a portrait of Sir Joseph Banks (1743-1820), with an assemblage of Australian flora. Sir Joseph Banks accompanied Captain James Cook on his voyage to Australia in 1770, personally meeting the cost of the scientific equipment and staff that were with him. He collected and wrote about Australian flora and over a long period enthusiastically encouraged and financed others to carry out scientific investigations in Australia in a variety of fields. On the back Mrs Caroline Chisholm is portrayed against a background composed of illustrations of women and children of her time and of ships and Sydney streets of the period. Caroline Chisholm (1808-1877) was a pioneer in encouraging the migration of women and families from England to Australia. The $5 note, which measures 150-mm by 75-mm, is basically mauve in colour with the main features being overprinted in black. The paper contains a water mark portrait of Captain Cook and an embedded metal thread running down near the centre.
Gold reserve against the note issue
The Australian Notes Act 1910 provided that the Treasurer should hold, in gold coin, a reserve of an amount not less than one-fourth of the notes issued up to $14,000,000 and an amount equal to the excess over $14,000,000. In 1911 this provision was amended and the Treasurer was required only to hold, in gold coin, an amount not less than one-fourth of the total amount of Australian notes issued. In June 1931, to permit further shipments of gold to meet short-term obligations in London, an amendment to the Commonwealth Bank Act provided for the reduction of the gold reserve for the two years ended 30 June 1933 to not less than 15 per cent. The reserve was to be increased, by graduated steps, to 25 per cent by 30 June 1935. In May 1932 a further amendment to the Commonwealth Bank Act provided that the reserve might be held 'in gold or in English sterling or partly in gold and partly in English sterling'. English sterling was defined as 'currency which is legal tender in the United Kingdom and included (a) balances standing to the credit of the Bank at the Bank of England or at any other of its bankers in London; (b) Bills of Exchange or advances secured by Bills of Exchange) which (i) are payable in the United Kingdom in currency which is legal tender in the United Kingdom; (ii) will mature in not more than three months, and the security for the payment of which bills is, in the opinion of the Bank, satisfactory; and (c) Treasury Bills or other securities of the United Kingdom which will mature in not more than three months'.
The statutory reserve against the note issue was abolished by the Commonwealth Bank Act 1945 which provided that the assets of the Note Issue Department should be held in gold, on deposit with any bank, or in securities of the Government of the United Kingdom or of the Commonwealth or a State. This provision was continued in the Reserve Bank Act 1959.
AUSTRALIAN NOTES IN CIRCULATION, JUNE 1962 TO 1966($'000)
Reserve Bank-Note Issue Department
The following statement shows particulars of liabilities and assets of the Note Issue Department of the Reserve Bank as at 30 June 1965 and 1966.
RESERVE BANK OF AUSTRALIA: NOTE ISSUE DEPARTMENT
LIABILITIES AND ASSETS, 30 JUNE 1965 AND 1966
Until June 1951 all profits of the Note Issue Department, with the exception of $4,000,000 and $2,400,000 paid to the capital accounts of the Rural Credits Department and Mortgage Bank Department respectively, were paid to the Commonwealth Consolidated Revenue Fund. For the years 1951-52 to 1955-56 the profits were distributed as follows: (a) $1,000,000 per annum to the capital accounts of the Commonwealth Trading Bank (prior to 3 December 1953 the General Banking Division of the Commonwealth Bank) and the several departments of the Commonwealth Bank, distributed two-sevenths each to the Commonwealth Trading Bank, Mortgage Bank Department and Industrial Finance Department and one-seventh to the Rural Credits Department, and (b) the balance to the Commonwealth Consolidated Revenue Fund. Since 1955-56 the profits have been paid to the Commonwealth Consolidated Revenue Fund. Profits of the Note Issue Department in 1965-66 amounted to $31,070,000.
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