Next time you spend an Aussie dollar you might stop to consider that, if former prime minister Robert Menzies had gotten his way, you’d be handing over a “royal” instead. Menzies was famously pro-monarchy and pro-Britain. In 1963, welcoming the Queen in Parliament, he gave his much-quoted speech in which he said:
Ma’am, there are a lot of interesting people in the world who like to discuss the Monarchy. There are clever people in the world, at least so I understand, who have discovered that all sorts of things ought to be done to the Monarchy, to democratize the Monarchy, to do something to it, to do something to what we all are proud to say is the most democratic Monarchy in the whole wide world. We pay no attention to that; when we see you, we see you as our Queen, we see you as our Sovereign Lady, we see you as the successor of monarchs who in this very century, have by their own conduct and their own standards and their own genius, helped to preserve our Monarchy in a world in which crowns have been tumbling and disasters have beset mankind.
All I ask you to remember, in this country of yours, is that every man, woman and child who even sees you with a passing glimpse as you go by, will remember it with joy, remember it in the words of the old seventeenth-century poet who wrote those famous words “I did but see her passing by. And yet I love her till I die”.
Menzies was apparently keen on the idea of a knighthood, but it’s said that he didn’t believe a sitting prime minister should get one. The solution was found. The Queen awarded him the “Most Noble Order of the Thistle” – a knighthood that was hers alone to confer.
With this level of mutual admiration it isn’t surprising that Menzies – when the time came to abandon the crazy old currency system Australia had inherited from the UK – wanted to name the new unit in a way that retained some link to his beloved Britain. “Royal” was his captain’s pick.
Actually “royal” has some precedent as a currency name. The word “royal” comes from the Latin “regalis” and that linguistic root has spawned numerous words in numerous languages. According to some opinions the word “real” in “real estate”, for example, implies that all property is ultimately vested in the Crown (this view is contested). Iran, Oman and Dubai all use a “rial” as their unit of currency, and the meaning is essentially “royal”. Brazil’s currency is the “real”.
The idea that the Australian currency needed to change dated from the time of Federation in 1901, but it was an idea that kept getting put off. Under the old Imperial system there were 12 pennies to a shilling and 20 shillings to a pound. There were also “guineas” which were 21 shillings. The coins were half-pennies, pennies, threepences, sixpences, shillings and florins (two shillings). The rich might also have some gold sovereigns, each with a face value of a pound. In common slang a threepence was a “trey bit”, a sixpence was a “zac” and a shilling was a “dinar” (probably imported from the Middle East by returned WW1 servicemen). A pound was a “quid” – a word that still finds some use today as a stand-in for “dollar”.
It was calculated that currency reform would save millions by streamlining the arithmetic of accounting and making overseas trade easier and smoother. So by 1958 Menzies was promising to start the process. A decimal currency committee was set up in 1959, but it took three years to present its findings. These led to the Currency Act of 1963, which nominated February 14, 1966 as “changeover day”.
A public competition called for naming suggestions, with “Austral” one of the more sensible options proposed. Menzies didn’t like any of the suggestions and in June 1963 – the year of his knighthood – the government announced the currency would be the “Royal”. Shillings and florins – in a new pattern – would stay part of the decimalised system, he proposed. “Royal”, however, was not a popular suggestion.
The opposition to the “Royal” proposal was immediate and immense. Hardly anybody liked the idea, with Menzies accused of putting his own sentimentality ahead of public preference. He tried to tough it out, but the opposition was so fierce and widespread that by September he conceded defeat. There was a belated push for “Austral” after all, but Treasurer Harold Holt – who was copping death threats over the whole “Royal” issue – pointed out that saying “fourteen Australs” would sound like “forty nostrils”. The point was taken. Australia followed the US pattern of dollars and cents.
It was agreed that for two years after the new currency was introduced people would still be able to use their old currency, which would gradually be retired from use. Sixpences remained effectively interchangeable with five cent pieces, and shilling for ten cents, for several years, in fact.
A big public education campaign was mounted to help people grasp the new system. Artist Monty Wedd drew the character “Dollar Bill” which became the face of the campaign.
It’s interesting to note, as an aside, that this currency reform took place against a global background of considerable monetary turmoil, mostly caused by the ever-ballooning deficits and debt of the USA. Ever since World War 2, the international monetary system had been governed by the so-called Bretton Woods agreement, under which currencies were pegged to gold via the US dollar. Gold was valued at $35 an ounce and the US was pledged to exchange dollars for gold on demand. This made dollars desirable to hold and gave the US a massive advantage over all other countries.
French president Charles de Gaulle called America’s position one of “exorbitant privilege”, since the USA could pay for imports with dollars it printed, while other countries needed to have dollars to settle trades. Meanwhile, the flood of dollars into non-US countries fuelled inflation. Countries stored much of their gold in the USA and England, but persistent US deficits made it seem likely that the time would come when this gold might end up being impossible to retrieve. By 1960 US overseas debt outweighed its gold holdings.
In 1963 an angry de Gaulle said that:
Western Europe has become an American protectorate without even realizing it. We must now rid ourselves of their domination. But the difficulty here is that the colonized don’t really want to emancipate themselves. Since the end of the war, the Americans have subjugated us painlessly and without much resistance.
He set about bringing France’s physical gold holdings back from the USA, via airlifts and ocean liners. In 1965 he ratcheted up the rhetoric and the gold redemptions, telling a press conference that:
In the current system, the United States can go into debt for free, at the expense of other countries, because what the United States owes them from trade is paid, at least in part, with dollars only they can create. Considering the serious consequences and the crisis that could arise from this situation, we think that measures should be taken to avoid this. We consider it necessary that international trade is settled, as was the case before the great misfortunes of the world [First and Second World War], on an indisputable monetary base. One that does not bear the mark of any particular country. What basis? In truth, nobody can really imagine any other standard than gold.
The tensions continued, with no sign of budgetary reform on the US side. In 1971, President Richard Nixon “closed the gold window”, ending convertibility of dollars to gold.
The US relinquished its link to gold, but created the concept of the “petrodollar”, under which the requirement to settle oil contracts in US dollars bolstered demand for the currency and maintained the dollar’s “exorbitant privilege”. As for the Australian dollar, it was pegged to the US dollar (and later to a basket of currencies) until 1983 when the Hawke Government cut the ties and allowed it to float freely on the open market.
Since then the “Pacific Peso” has had its ups and downs, mostly fluttering around 70-odd US cents in value. But while it’s a dollar in name, it’s a “royal” in one respect: it still carries the face of the King of England on one side. Menzies would take some comfort in that.
It may be worth noting that in recent times, as US debt nears $40 trillion, the French have once again virtually recalled their remaining US gold holdings, selling “non-compliant” gold bars in the US to replace them with “compliant” ones stored in their own vaults – and pocketing a very handy profit in the process. Is the era of the petrodollar drawing to a close? Some say yes, others say no. Time will tell, either way.
