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Australian 5 shillings incurs loss

In 1916, at the height of WWI, the Australian government made a decision to prepare and print a supply of paper 5 shilling notes. The intent was to use them as a silver substitute.

 Face and back of the extremely rare specimen Australian 5 shillings note sold by Noble Numismatics in November for $59,422. (Images courtesy Noble Numismatics)

Face and back of the extremely rare specimen Australian 5 shillings note sold by Noble Numismatics in November for $59,422. (Images courtesy Noble Numismatics)

Throughout the war, the price of silver had risen steadily. In 1914 it averaged about $0.50/oz. At war’s end it would top $1.00/oz. One consequence was that come 1916 the intrinsic value of Australia’s silver coinage exceeded face value. Not only was it no longer economic sense to continue striking sterling silver coins, but value of existing coins encouraged hoarding; hence, the decision to produce a 5 shilling note. This was undertaken by the Commonwealth Treasury.

Unlike contemporary first issue (1913-1915) Commonwealth of Australia notes, the face of the new 123x66mm 5 shillings showed a profile of the monarch, George V. Also, unlike the CoA issues, the note was simply headed “AUSTRALIAN NOTE.” Below, the promissory clause was given in the name of the Treasurer of the Commonwealth. The denomination was repeated twice in words and three times numerically. The surrounding border on three sides contained the repeated words “FIVE SHILLINGS.”

The above words and king’s vignette were printed entirely in black. A green geometric underprint covered the entire note and repeated the denomination in green words and numerals. A small font was used to print the words “5 SHILLINGS” continuously behind the main design in a light brown.

The back was all green. It carried the words “FIVE SHILLINGS” enclosed in intricate geometric lathe work.

In 1916 1,020,000 of these notes were printed but without signatures. Those of Assistant Secretary to the Treasury Charles J. Cerutty and Secretary James R. Collins were applied later.

In the event, the notes were not issued nor were steps taken to amend either the Australian Notes Act or the Commonwealth Bank Act to allow for their issue.

Post-war the silver price showed no signs of softening, and on Feb. 5, 1920, the Commonwealth Treasurer announced that passengers heading overseas would not be permitted to take with them more than £3.0.0 in Australian silver coins. This announcement also included a statement that an issue of 5/- notes would take place to help manage the growing shortage of silver coin.

Later that year the Commonwealth Bank Act was amended. Among other matters, it removed the responsibilities for production and issue of Australia’s bank notes from the Commonwealth Treasury. These duties were transferred to a newly established Note Issue Department of the Reserve Bank of Australia. It was this 1920 Act that allowed for issue of a 5 shilling note redeemable in silver coin.

However, within months of the passing of this legislation, the price of silver began to fall and none of the 5 shilling notes were ever issued. By 1922, with the price of silver around $0.65/oz, the immediate need for the notes was long past and an order went out for their destruction.

Between July 6 and Aug. 3, 101,970 sheets of 10 5-shilling notes apiece went into the furnace for a total of 1,019,700 notes. The note printer retained 28 sheets for specimen and file copies. The Secretary to the Treasurer acquired the remaining two sheets. Mick Vort-Ronald reports that today 10 hand-cut examples are held by the Reserve Bank of Australia.

In 1993, a descendant of Cerutty sold four signed examples to Downies that had been overprinted “Specimen.” They are likely to have legally in the possession of Cerutty and are distinct from those presently held by the RBA. They are now the only four known in private hands.

Downies sold one at auction, and the other three by private treaty. One of these four appeared in Noble Numismatics’ Sydney auction last November. It was graded aUNC with one light vertical center fold. On an estimate of AUD70,000 it realized US$59,422 (AUD77,675).

This sum was a shattering loss for its vendor. Prior to the sale, Australia’s MSM had been reporting that it had been purchased at the height of the Australian bank note boom for AU$300,000 from Western Australian-based dealer, The Rare Coin Company. This firm had collapsed in 2013 under a mountain of debt.

This article was originally printed in Bank Note Reporter. >> Subscribe today.

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