The NSW gold rush

 

 

 

 

What happened if a goldminer found gold?

The Australian Colonies
Stage 3 | History

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Detail from newspaper advertisement, 1852
Activity: source analysis

Click on the advertisement and read it closely:

Q. What can people use to pay for things they want to buy? 

The business valued 1 ounce (28 grams) of gold dust at '£3 13s' (3 pounds 13 shillings).

Source: The People's Advocate and New South Wales Vindicator, 9 October, 1852. p2

Soon after gold was discovered in NSW, a plan was underway to use that gold to create Australian-made coins.

Gold as currency

If a goldminer found raw gold they could sell it to a private company or bank for cash.1 Or they could have it processed into refined gold.2 

This allowed them to pay for goods and services, like food or equipment.3 

However, these options could be risky because:

  • a private company might not give the miner the best value for their gold;
  • processing gold is complex and might result in poor-quality gold if not done properly.

What was needed was a trusted form of coinage, which miners could exchange for their hard-earned gold. 

  • 1. The Sydney Morning Herald, 6 November, 1851. p1.
  • 2. The Sydney Morning Herald, March 16 1853, p3.
  • 3. The People's Advocate and New South Wales Vindicator, 9 October 1852, p2.

Lessons learned in California

During the early years of the Californian gold rush, it was common for private companies to refine a miner's gold, turning it into coins or tokens.

But this could create problems if a company produced 'underweight' coins (either by accident or on purpose) that did not contain the correct amount of gold. This did happen, though it was not widespread. Miners quickly learned who did good work, and the companies that did poor work were soon out of business.4 

However, to avoid that problem altogether, the NSW Government decided to establish its own mint. 

A mint is an industrial factory where raw gold (including nuggets, flakes and dust) is processed and turned into gold bars, or coinage to be used as an official currency. It can also process other metals such as silver.

A government-run mint would:

  • provide miners with a safe place to send their gold for processing;
  • ensure the gold would be processed to the highest quality and agreed standard value;
  • create gold coinage that was guaranteed to be correct in value

In December 1851, the NSW Government requested that the British government set-up a branch of London’s Royal Mint in Sydney. It took two years for the British government to agree to the request.

  • 4. White, Lawrence H, The dynamics of competitive coinage: evidence from private mints in the American gold rushes (March 17, 2020). GMU Working Paper in Economics, no. 19-41.

The Sydney Mint opens

The Royal Mint, Sydney (or Sydney Mint) opened in May 1855. It was the first ever overseas branch of the Royal Mint, London – which had opened for business 969 years earlier!

It quickly began processing raw gold into coins called ‘sovereigns’. Smaller amounts of coins of a lesser value (called 'half-sovereigns') were also made.

All the coins produced at the Sydney Mint were the same 'gold standard' (22 carat gold) as those made at the Royal Mint, London. However, the early Sydney sovereigns were slightly different to the British ones:

  • British sovereigns contained small amounts of copper to make them harder and strong enough for coins.
  • Sydney sovereigns contained silver instead of copper (they used copper after 1870).
  • This meant that Sydney sovereigns were slightly more valuable than the British sovereigns. But only if they were melted down for the raw metals - both coins were valued at £1.7
  • Until 1871, the coins were also stamped with different portraits of Queen Victoria - Sydney sovereigns showed her with a wreath of banksia in her hair. 

CAN YOU SPOT THE DIFFERENCE?

Using silver, instead of copper, made the early Sydney Mint sovereigns lighter in colour to the ones produced in later years.

Look at these two coins. Can you work out which one is the oldest?

  • 7. The Sydney Branch Mint, report from a select committee, 1862.
  • Gold coin with head on it.

    Sydney Mint half-sovereign (obverse)

  • Reverse of gold coin.

    Sydney Mint half-sovereign (reverse)

  • Gold coin will head on it.

    Sydney Mint sovereign (obverse)

  • Reverse of gold coin.

    Sydney Mint sovereign (reverse)

Goldminers sent their raw gold to the Sydney Mint in huge quantities. Nearly 6000 kilograms, valued at £453,000 ($70-90 million today), arrived in the first seven months

In 1860 over 80% of the gold discovered in Kiandra (NSW) had been sent to the Sydney Mint8.

Gold did not just come from NSW. Miners from Victoria sent it to Sydney to have it processed, as did miners from New Zealand.

  • 8. Kiandra Gold Fields, report from Commissioner in charge of southern gold fields, September 1860.

I want my money ... please!

Uralla gold escort to Sydney Mint, 1859 - 1.6kg of gold

Receipt for one bag of gold sent from Uralla (NSW) to the Sydney Mint in April 1859. The bag weighed about 1.6 kilograms.

The sender addressed it to:

“The Deputy Master of the Mint. Proceeds to be returned in coins (£200 sovereigns with the balance silver) without delay."

This tells us that the sender was keen to have his raw gold returned to him as coins as quickly as possible - £200 in 1859 has a value of around $23,000 today!

For a small fee (1% of the total value), the miners could have their gold processed and returned either as coins or gold ingots (small bars), or the value of their gold could be deposited into a bank account.

That value was determined by the Mint's assayers, highly trained employees whose job was to work out the correct value of every gold deposit that arrived at the Mint.9

The establishment of the Sydney Mint was a huge success:

  • 50,000 sovereigns were being produced each week by the end of 1855;10  
  • goldminers preferred the sovereigns to banknotes (which could be easily damaged);11
  • the sovereigns were quickly adopted as the 'standard' currency in all of Australia’s colonies;
  • merchants and traders who arrived in Sydney from around the world also accepted them as payment for goods and services.

This new Australian-made gold coinage allowed people to easily transfer the wealth of the gold fields into the country’s economy.

  • 9. ‘The Sydney Mint’, Empire, 12 May 1855, p5.
  • 10. Maitland Mercury and Hunter River General Advertiser, 19 December 1855, p1.
  • 11. ‘Sydney Sovereigns’, Geelong Advertiser, 8 December 1855, p2.

How were sovereigns made?

After the raw gold was delivered to the Sydney Mint it went through a complex scientific and industrial process to be converted into coins.

It took about 8 grams of refined gold to make a Sydney sovereign.12

  • 12. ‘Gold’, Empire, 25 July 1851, p4.

What could a sovereign buy you in the 1850s? 

A sovereign was valued at 1 pound (£1)14 - more than $200 in today’s money.15 

Sovereigns were quickly accepted in shops, banks, hotels and other businesses as payment for goods and services.

Some goldminers would have saved their hard-earned coins. But others spent them on all sorts of things.


WHAT WAS THE COST OF LIVING IN SYDNEY DURING THE GOLD RUSH?

1 SOVEREIGN = £1 = 20 SHILLINGS

Where What How much?*

Restaurants

A two-course meal, including dessert, wine and bread at a fancy ‘French’ restaurant

3-4 shillings

Theatres

A ticket to the opera in Sydney

7-10 shillings
(depending on how good your seats were)

Tourism

A steamboat trip along the Hawkesbury River 

10 shillings/ per adult
5 shillings / per child

Travel

A one-way journey to England by ship

£18-£50/ per person

Food

A dozen eggs, or 450 grams of butter

1-2 shillings

Hotels

Renting a single room in Sydney for one week

£3 3s

Employment

A day’s work for a skilled labourer

16 shillings

Rewards

Reward for returning a lost horse to its owner

£1 (or more!)

'*Various Sydney newspapers c1855'

Activities for students:

Stage 3 | History | The Australian Colonies | Australia as a Nation

These simple tasks, which complement the web resource, have been designed to fit easily into your busy class schedule!

Creative Arts activity:

Identity, symbolism & creativity: design your own coin!

English activity:

Here; Hidden; Head: comprehension activity.

Maths

How many gold sovereigns will you get back?

Gold receipt print out.

Footnotes

About the author

Head and shoulders portrait of man standing holding old bottle and in front of shelf of bottles.

Edward Washington

Program Producer – Learning

Ed is part of the Sydney Living Museums learning team, which provides curriculum-based programs to more than 60,000 students and teachers every year. In 2019 he received the Ruth Pope Bequest Annual Travelling Scholarship for international travel and study.