Coinage

New Zealand, like the United Kingdom and Australia, has a fractional coinage system. In April 1963, however, it was announced that the Government had decided to change to a decimal currency in 1967. Distinctive New Zealand coins, issued since 1933 when the Coinage Act was passed, are the crown, half-crown, florin, shilling, sixpence, threepence, penny, and halfpenny. No farthings have been issued.

Crown pieces have been struck on three occasions. The first issue in 1935 was struck to commemorate the Jubilee of King George V. It was limited to 764 pieces and the Treasury decided to charge 7s. 6d. for each specimen. The second issue was in 1949 when 200,020 pieces were minted to commemorate the intended royal visit of King George VI. The third crown, of which 250,200 were minted in 1953, commemorates the Coronation of Queen Elizabeth II. In all, crown pieces to a value of £112,696 had been minted up to the end of 1959, of which £110,959 were in circulation. The crown is not, however, in general use but has disappeared into collections.

New Zealand coins are purchased from the Royal Mint, London, and from 1933 until the end of 1962 the value of coins purchased (excluding crown pieces) totalled £9,656,860. This sum was made up as follows:

At the end of 1962 the value of coin in circulation was about £6,304,000. The amount of coin issued at any time varies with public demand, and various factors influence the relative usage of the different denominations. For example, a change in the prices of newspapers or milk would have an appreciable effect on the use both of threepences and of pennies.

Coin is issued by the trading banks and the Reserve Bank to their customers in exchange for bank notes or cheques. From time to time the Reserve Bank, which holds the main stocks, advises the Treasury of estimated requirements and the Treasury, acting on behalf of the New Zealand Government, orders from the Royal Mint.

From 1933 to 1946 all silver coin, and the 1949 crown, were composed of 50 per cent silver and 50 per cent alloy. From 1947 they have been of cupronickel; that is, 75 per cent copper and 25 per cent nickel. Copper coin (penny and halfpenny) which was first authorised in 1939 to replace the Imperial bronze coinage hitherto in use, and first issued in 1940, consists of 97 per cent copper, ½ per cent tin, and 2½ per cent zinc. The issue of cupro-nickel coins, which were given equal status with silver coin as legal tender under section 31 of the Finance Act 1947, followed similar action taken in the United Kingdom as a result of high prices for silver and increased minting charges.

The standard size and weight of New Zealand coins issued prior to the introduction of decimal coinage and the remedy allowance, that is, the allowed margin of error in weight, were as follows:

The decision in 1933 to issue a New Zealand coinage to replace British Imperial coinage which, since 1840, had been the legal metallic currency, largely arose from coin smuggling in the early thirties when the Australian and the New Zealand exchange rates were devalued in terms of sterling. In May 1933 a Coinage Committee was appointed and asked to report inter alia on the designs to be adopted. It recommended that a special Coinage Designs Committee be set up. As a result of the work of this committee and its advisers, the design of the New Zealand coins broke new ground by making use of distinctive New Zealand symbols as the reverse types. The half-crown, for example, shows the New Zealand shield of arms surrounded by ornamentation based on Maori carvings, and the sixpence depicts the female huia, now extinct, which was one of New Zealand's most beautiful birds.

In 1940, when the first New Zealand copper coins were issued, there was also an issue of approximately 100,000 centennial half-crowns. This was the first truly commemorative coin issued in New Zealand and, like the crowns, is not in general circulation.

British silver coin ceased to be legal tender in New Zealand on 1 February 1935, and under the Coinage Act 1933 a tender or payment of money, if made in New Zealand coins of current weight, shall be legal tender to the following extent: (i) Gold, to any amount; (ii) silver and cupro-nickel, for amounts not exceeding £2; (iii) bronze, for amounts not exceeding 1s. Gold coin does not circulate in New Zealand.

The exportation of all coin is prohibited under the Finance Emergency Regulations 1940 (No. 2), except with authority from the Reserve Bank or the Customs Department. Travellers from New Zealand are, however, permitted to take silver coin not exceeding £2 or, if their journey is direct to the United Kingdom, not exceeding £5.

Tokens

One provision in the Coinage Act 1933 in empowering the Minister of Finance to authorise the issue of tokens, “purporting to entitle the holder thereof to demand goods and services”, harks back to an earlier period. In parts of the country, tokens are used to pay for milk delivered at the gate, but this restricted use scarcely compares with the period from 1857 to 1881 when bronze and copper penny and halfpenny currency tokens were issued by New Zealand traders.

The tokens were issued because of a marked shortage of small coins and, according to one authority, 147 varieties were issued. They included some attractive designs.

Some 20 years after their introduction, tokens represented about half of the copper coinage in New Zealand. None, however, were issued by traders after the British Government had advised in 1881 that it could supply all coin requirements and, in 1897, the tokens were demonetised. They retain considerable interest for coin collectors and some command good prices.

The rarest New Zealand coin is the 1879 penny bearing the head of Queen Victoria on the obverse and New Zealand above Britannia on the reverse. This coin, of which only about 20 examples were minted, has never been in circulation.

In New Zealand severe penalties are provided for counterfeiting, melting down, or marking coins of New Zealand or of any other country. Although, in the past, some counterfeiting has occurred, this has never been a serious problem in New Zealand.

Although gold coin does not circulate, sovereigns, previously kept as souvenirs, are occasionally sold to the Reserve Bank for £2 18s. Some British and Australian coins, mainly florins, circulate after being brought in by travellers. Because of the exchange-rate differential between New Zealand and Australia, the Australian florin is worth only 1s. 7d. in New Zealand. It is therefore not generally acceptable.

Decimal System

In New Zealand efforts have periodically been made to introduce the decimal system. In 1957 a representative committee was appointed by the then Minister of Finance “to examine matters connected with the possible introduction of decimal coinage in New Zealand”. In its report, dated 1 October 1959, the committee stated that it “is agreed in principle that a change to decimal coinage is desirable” and recommended a system that would involve a 10s. unit, with 10 lower units, “cents”, to the shilling.

In April 1963 the Minister of Finance announced the Government's decision to adopt decimal coinage in 1967, and by July 1964 the following decision had been made:

1. That the date of the changeover be Tuesday, 11 July 1967;

2. That the major unit adopted be based on 10s., and divided into 100 minor units valued at 1.2d.;

3. That the names of the major and minor units be “dollar” and “cent”; and

4. That the denominations of coinage be ½, 1, 2, 5, 10, 20, and 50 cents. Thus there will be no 2½ cent piece equivalent to the present 3d., nor a 25 cent piece equivalent to the present half-crown, which is to be withdrawn from circulation by 1967.

A Decimal Currency Board with members representing Treasury, the Reserve Bank, the Post Office, the trading banks, and commerce has been appointed to organise and administer the changeover. A Coinage Design Advisory Committee has also been set up to advise the Government on various aspects of design for the new coins. It has been announced that a new effigy, or “head”, approved by the Queen, will be used, the work of Arnold Machin, R.A.

The Decimal Currency Act of 1964 covered many of the above points, as well as those dealing with the composition of the new coins, new legal tender amounts, and the counterfeiting of coin. This Act replaced the Coinage Act of 1933.

Bank Notes

Paper currency in use in New Zealand comprises bank notes issued by the Reserve Bank of New Zealand which, as the central bank, has the sole right of note issue. For nearly 80 years prior to 1 August 1934, when the Reserve Bank commenced business, the trading banks had the right to issue notes. On the establishment of the Reserve Bank, this right was withdrawn. Two years later, on 1 August 1936, the Reserve Bank assumed liability for all trading bank notes outstanding, then some £549,000; in 1976 all such notes will be deemed to be no longer in circulation and will be treated as unclaimed moneys. At the end of 1963 the value of outstanding trading bank notes was £346,000. It is probable that a substantial proportion are either in collections or have been lost or destroyed.

Reserve Bank notes are issued in denominations of 10s., £1, 5, 10, and 50. So far two issues of notes have been made, the second one being on 6 February 1940, partly to commemorate New Zealand's centenary and partly to replace gradually the first temporary issue. A £10 note was introduced with this issue. Unlike those on notes of some countries, denominations in New Zealand are readily distinguished by differences in size, colour, and design. In design the notes incorporate historical features. All, for example, have an engraved portrait of Captain Cook on the face. On the back the design for the £5 note, for example, includes a fantail (bird) and a scenic engraving of Lake Pukaki and Mt. Cook while for the £10 note the design on the back is an engraving of a New Zealand sheep-farming scene.

Over the years there has been a distinct trend towards a relatively greater use of £5 and 10 notes. The table below, which expresses each denomination as a percentage of the total net note circulation (i.e., excluding notes held by the banks as till money), clearly illustrates this trend.

Quality and Issue of Notes

Reserve Bank notes are printed in London by Thomas de la Rue and Co. Ltd. In order to maintain the quality of the notes in use by the public and also to ensure that adequate stocks are available to meet day to day requirements, it is necessary for the Reserve Bank to order well ahead and to forecast likely needs. The average life of all notes except the two highest denominations is estimated at less than one year; for a £10 note it is estimated at 15 months, and for the £50 note, which has a restricted use, at about three years. As notes circulate and become dirty or worn, they are withdrawn from circulation, cancelled and destroyed, new ones being issued. In 1963 a total of over 60 million note forms were destroyed in keeping with the policy of maintaining a good quality issue.

Notes that are damaged – for example, by inadvertently including them in the laundry – are sent to the Reserve Bank which gives effect to the “promise to pay” as soon as the value of individual notes is established by painstaking examination. The Reserve Bank makes no charge for this service.

In ordering new notes to ensure that an adequate supply is always available to meet the public's needs, the Reserve Bank has several factors to consider, some of a short term, some of a long term nature. First, there are seasonal factors such as the Easter and Christmas holiday periods. In December 1962, for example, notes in circulation increased by £2 million following on an increase of almost £7 million in November, but fell by about £14 million in January 1963. Secondly, there are changes in basic economic conditions which, among other things, effect the note circulation. Changes in the total national income and in the levels of salaries and wages, and movements in prices greatly influence the value of notes in circulation. Finally, there are the longer term factors such as the growth of population, the number of cash transactions, and the holding of larger amounts as till money. In New Zealand it is doubtful whether hoarding, burying notes in the garden or under the floorboards is at all widespread although isolated instances crop up from time to time.

Most Reserve Bank notes are bought by the trading banks from the Reserve Bank for issue to their customers. Some notes are also issued by the encashment of Government cheques at the Reserve Bank. The process of issuing new notes and withdrawing older and dirty ones is virtually continuous. To cope with the large volume, the Reserve Bank uses special equipment such as note-counting machines.

Over the years the note circulation has increased substantially, especially during the First and Second World Wars. Since 1935 the weekly average of Reserve Bank notes in circulation (including notes in the hands of the trading banks) has increased as follows:

As a proportion of the total money supply, which comprises coin, notes in the hands of the public, and demand deposits at the Reserve Bank and the trading banks, the note circulation has remained remarkably constant over the last 30 years. In June 1930 it was equivalent to about 17 per cent of the total, and in June 1963 the corresponding figure was just over 17 per cent.

Absolutely, demand deposits at the trading banks are more important as money than the note circulation. In March 1963, for example, these deposits totalled nearly £272 million while the total value of notes issued was £84 million. Of this latter sum, the trading banks held about £17 million as till money.

Reserve Bank notes are legal tender in New Zealand up to any amount. Since 1938, however, notes have not been convertible into sterling. The reproduction of bank notes is, of course, a punishable offence in New Zealand but counterfeiting is, fortunately, conspicuous by its absence.

Prior to the introduction of the Finance Emergency Regulations in 1940, there had been no control over the export of New Zealand bank notes. These regulations enabled the Reserve Bank to restrict the outflow of notes, and in April 1940 the maximum amount in notes and coin that could be taken by overseas travellers without special authority was fixed at £10 (now 15) if proceeding direct to the United Kingdom, and £5 (now 7) if for other destinations. Since January 1949 only 10s. and £1 notes may be exported.

The importation of money into New Zealand is not limited, but the notes of other countries do not circulate.

It is planned that new notes, with different designs, will be introduced in 1967, at the same time as decimal coinage.

by Robert John Familton, M.COM., Economist, Reserve Bank, Wellington.

• Appendices to the Journals of the House of Representatives, B.3, 1959, “Report of the Decimal Coinage Committee, 1959”
• Bulletin (monthly), Reserve Bank of New Zealand
• Money and Banking in New Zealand, Reserve Bank of New Zealand (1963)
• Overseas Trade and Finance, Reserve Bank of New Zealand (1960)
• British Commonwealth Coinage, Linear, H.W.B. (1959)
• Numismatic History of New Zealand, Sutherland, A. (1941).