In the very first days of colonial Australia, rum was the great circulating medium
The first few decades of Australian settlement were an interesting time. The landscape was not what was expected and the officers, settlers and convicts found Australia to be a harsh and unforgiving environment.
Establishing a stable and acceptable currency is an important part of any community and this was certainly a challenge for the early settlement leaders.
When the First Fleet arrived on Australian shores, the only currency on board was 300 pounds of English coinage (held by Captain Phillip) and a mix of other foreign currencies in the pockets and purses of officers, sailors and passengers. These included English guineas, shillings and pence, Dutch guilders, Indian rupees and Spanish reales.
Trying to use so many different currencies was very confusing. Their value was often related to their metal content, but arguments happened all the time when people didn’t agree on a value. The other problem with this currency, was that there wasn’t a lot of these coins and they were often taken out of the colony by trading ships.
The colony tried to pay trading ships with promissory notes (A promissory note is a signed document with a written promise that a specific amount will be paid to the person holding the note.) that promised the traders could exchange this for cash payment when they arrived in England. The traders often refused these notes as they wanted cash to buy goods on the return journey.
Promissory notes were an unreliable way to trade. They could be easily forged (fake ones could be made), people often argued about their value and some people used them to pay for goods even though they knew they didn’t have the money to cover them. There is even the story of the owner of a hotel who was known to bake his promissory notes in the oven so that the paper would be brittle and they would fall apart before they could be claimed.
Rum as a Currency
The use of rum as a currency began around 1790. Rum was brought into the colony and controlled by a small number of people who became very rich. The problem with rum as a currency was that many workers were paid in rum and, instead of using it to buy the goods and services they needed, they drank it. The trade in rum grew and grew until it became the most popular form of currency.
In the very first days of the colony of New South Wales the generally recognised medium of exchange was nothing else, but barter — rum, corn, and wheat were the principal things used as currency, and from the beginning rum was the great circulating medium. The wages of laborers were set down as so many gallons of rum, rewards were paid in it, and it is actually on record that a wife was purchased from her husband for four gallons of the red and ardent spirit.
When Governor King took over command in 1800 he was startled to learn how varying and exorbitant was the value of this commodity — he found that spirit which had been imported for 10p a gallon was being retailed for £2. Everybody traded in it. Even the construction of the church was partly paid for in rum, and admission to the first theatre established in Sydney could be obtained for a nobbler (dram of alcoholic spirit).
The Rum Hospital
Ten years or so later the most historic instance of the employment of rum as currency was connected with the erection of the hospital founded by Macquarie ( Sydney Hospital). Contractors of the hospital were reimbursed with a monopoly of the spirit trade for four years.
The hospital was Lachlan Macquarie’s first public works project as Governor of New South Wales, and having been denied the necessary finances to build it, he struck up a deal with merchants Alexander Riley and Garnham Blaxcell, and colonial surgeon D’Arcy Wentworth. In exchange for a monopoly on the importation of 45,000 gallons of rum (spirits) to the colony, these contractors built Macquarie’s hospital, which as a result, became popularly known as the ‘Rum Hospital’. The hospital south wing is now known as The Mint, and the north wing is NSW Parliament House.
Bligh and the Rum Rebellion
The Rum Rebellion of 1808 was the only successful armed takeover of government in Australian history. During the 19th century, it was widely referred to as the Great Rebellion.
On 26 January 1808, the 'Rum Rebellion' took place when 400 New South Wales Corps soldiers, led by Major George Johnston (1764–1823), marched from their barracks and arrested Governor William Bligh. The day was significant as it was the 20th anniversary of their arrival in the colony.
Captain William Bligh (1754–1817) was the fourth and last naval officer to be appointed Governor of the New South Wales penal colony, replacing Governor Phillip King (1758–1808) in 1806. Although he was a man of great integrity and courage, he was known for his hot temper and intemperate language. When Bligh arrived in the British colony it was in a poor state. Floods, the lack of supply ships and a reduction in convict labour had severely diminished the self-sufficiency of the colony. Bligh set up flood relief for the struggling farmers and promised immigrants that the government stores would buy their crops after the next harvest. Bligh also set up a government farm on the Hawkesbury as a 'model', to show the colonists what they believed to be the benefits of efficient farming.
Bligh's reforms drew resentment from both the New South Wales Corps and landowners as he tightened government control over visiting ships and their cargos, and ordered that promissory notes be made payable in sterling currency. John Macarthur (1767–1834) was at the forefront of the opposition and when Bligh ordered the destruction of illicit stills and prohibited the bartering of spirits for grain, labour, food or any other goods, especially rum, these orders aroused immediate and heated revolt.
The Rum Corps
Bligh was arrested and the colony was placed under military rule. This was the only time in Australian history that a government was overthrown by a military coup.
The military stayed in power for two years until Lachlan Macquarie, the fifth Governor of NSW, assumed office at the beginning of 1810. The overthrow of Bligh much later became known as the ‘Rum Rebellion’ because the NSW Corps was heavily involved in the trade in rum in the colony and was nicknamed the ‘Rum Corps’. The term 'Rum Rebellion' was not used at the time. The factors leading up to Bligh’s arrest had much less to do with the rum trade and much more to do with a battle for power between the military and civil elites of the colony and the Governor.
Some of the officers in the Corps, like John Macarthur, became powerful and wealthy citizens in the small Colony. Macarthur was favoured with large land grants and other privileges under Lieutenant-Governor Francis Grose. As Officer-In-Charge of the NSW Corps, Grose had temporary charge of the Colony after Governor Phillip left and appointed Macarthur to several official positions of influence.