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Spanish and Dutch coins from overseas, and these circulated in the various towns. Between
1840 and 1861 there was a period of legal uncertainty and a shortage of coins, which gave
rise to the issuing of ‘FitzRoy’s debentures’ and the formation of Governor Grey’s Colonial
Bank of Issue soon after (see below).
From 1861 to 1893, in response to the shortage of coins, tradesmen’s tokens were
issued by the bigger stores of every town. These are described in more detail in Chapter 13.
From 1893 to 1933 various banknotes were in circulation, as each commercial bank
issued its own notes in exchange for gold. However, these notes were of all different sizes
and colours, and as not every bank accepted all the others’ notes there was a need for
standardisation. In 1934, Gordon Coates’ government established the Reserve Bank of New
Zealand, and from then on the practice of banks issuing notes ceased; all notes thereafter
were issued by the Reserve Bank as a state monopoly. 15
Since the European colonisation of New Zealand, there have been three brief periods
in which money creation was democratised, as I explain below.
FitzRoy’s Debentures
In 1844, Governor Robert FitzRoy issued £15,000 worth of debentures, or promissory notes,
which became known as ‘FitzRoy’s debentures’, a currency used to pay public servants.
The currency, however, was unsuccessful. The notes were easily forged, they were not
backed by gold and some were unsigned, and many citizens didn’t trust them for these
reasons and because they were aware that FitzRoy had not obtained permission from
England to issue them. 16
The Colonial Bank of Issue
The second official currency was only slightly more successful. FitzRoy was replaced by
Governor Grey, who arrived in 1847 and established the Colonial Bank of Issue, or CBI.
There was no Legislative Assembly in New Zealand until 1852, and Grey exploited the
slowness of communications with the Colonial Office to issue an interest­free currency