Before the budget: how Governor Phillip managed without cash in the colony
Without coins or British currency, Phillip managed the fledgling colony with a bunch of IOUs.
On January 18, 1788, Captain Arthur Phillip and the First Fleet arrived in New South Wales, carrying supplies but no currency. The British government had not granted Phillip currency, relying instead on officers, sailors, and some convicts carrying coins or banknotes. Phillip's ability to spend was limited, as he could only issue debt against the British Treasury.
This debt took the form of IOUs, which Phillip used to pay sailors for building shelters for the colony. The sailors accepted the IOUs because they trusted Phillip's authority and the British Treasury's eventual redemption of the debt. Phillip's actions were not approved by Parliament, but rather, he spent without permission and relied on the trustworthiness of the IOUs.
This system of spending and IOUs was also adopted by free settlers and convicts, who issued their own promissory notes. The Commissariat, a government store, provided supplies and store receipts to help colonists establish local production. As the colony grew its own food, store receipts became an acceptable means to settle outstanding IOUs.
It wasn't until 1792 that the British government finally supplied currency to NSW, but by then, Phillip had already shaped the society through his use of IOUs.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
