How early Sydney created money out of thin air with IOUs
Governor Phillip issued handwritten IOUs as currency in 1788. He trusted people would accept his government's promise to pay.
When Governor Phillip landed in January 1788, the British government sent no coins or banknotes. Phillip could issue debt, IOUs, against the British Treasury.
Governor Phillip signed parchment promising payment. Phillip then paid First Fleet sailors with these promises.
They needed them to build shelters. The sailors accepted them because Phillip was an agent of government.
Colonists and sailors also issued their own promissory notes. But these held no value since they lacked government backing.
The Commissariat store issued receipts that settlers could use to buy goods. This created a substitute for currency.
Real money did not arrive until November 1792, nearly five years later.
- January 18 1788
- Landing date
- November 1792
- Currency arrival date
- Nearly 5 years
- Years without official money
Why it mattersThe story shows how trust in government authority can create money from nothing. It reveals basic truths about how currency actually works.
AustraliaIt explains how Australia's first economy functioned without official currency, shaping colonial financial systems.
✓ Claims checked against the source. checked 1 h ago
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