Colonial Liquidity: Money, Banking, and International Finance on the Australian Frontier, 1830–50

Scholars have recently been elaborating heterodox accounts of credit-money in capitalist societies as not merely making exchange more efficient, but as the source of capitalism's dynamism and fragility. This paper advances these debates through a reappraisal of the monetary innovations that facilitated colonial New South Wales’ transition from a penal colony to capitalist economy between 1830 and 1850, a period characterized by expanding pastoralism and Indigenous dispossession, the arrival of British banks, and the colony’s first financial crisis. Drawing on Mehrling’s notion of the ‘inherent hierarchy of money’, the paper examines how shifts in early nineteenth-century British imperial trade policy constituted a series of new figures – the capitalist-pastoralist, the imperial banker and the state regulator – and how these new trade conditions demanded experimentation with new credit-money instruments to expand liquidity in the exchange networks occupied by these figures. These instruments, in turn, created causal links between these figures, configuring new power hierarchies. The promissory notes and book credit that linked pastoralists, employees and storekeepers on frontiers depended on the lien-contracts between pastoralists and colonial merchants, which in turn extended from the bills of exchange and securities flowing between merchants and imperial banks, between banks and London capital markets, and ultimately the markets and the Bank of England. While each network represented a struggle for liquidity – and survival – these were also shaped and leveraged by the networks above it. In the colonial government’s attempts to control these experiments in creating liquidity – particularly in the legislation responding to the 1843 financial crash that followed a decade of rampant credit-creation – the modern state was refashioned as a ‘creature of money’. Colonial monetary history links state formation and the construction of international finance with the local constitution of debt-laden pastoralists, wage-earners and the financing of violent Indigenous dispossession.