The NSW gold rush

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

Gold as currency

Having some gold allowed a miner to pay for goods and services, such as food or equipment like shovels, tents or bedding.¹

If a miner found raw gold they could sell it to a private company or have it auctioned, with the proceeds being paid to them or deposited into a bank account.²

Or they could have it processed into refined gold ingots (small bars).³

However, in the early stages of the gold rush 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 raw gold.

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.

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 969 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.

These valuable historical sources show us what the Sydney Mint looked like during the gold rush years.

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?

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.

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

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.

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.

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

Follow these steps to see how the Sydney Mint turned raw gold into gold sovereigns.

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

* Various Sydney newspapers c1855