The Nelson Bank
Nelson led the way with its own money
Click to enlarge
The first settlers under the New Zealand Company settlement plan arrived in Nelson in February 1842. Within a few short months, on 30 May 1842, the Union Bank of Australia (now the ANZ bank) opened for business in the new town.
The bank immediately issued its own Union Bank notes which provided an effectual means of exchange for the settlement and allowed the commerce of the town to develop. However, all was not well and in 1844 the New Zealand Company began defaulting on its debts and went into partial bankruptcy. A period of economic depression followed and upon the declaration of the Paper Currency Ordinance of 1847, the Union Bank closed its Nelson branch on 7th March 1848 to concentrate its note issue in Wellington.
This impacted further on the town. What bank notes remained in circulation soon became dilapidated. There was a desperate shortage of trading currency and barter of goods and services was often the order of the day.
However, within a few months in 1848 a local firm of merchants, Morrison and Sclanders, began to issue their own one pound notes under the name of the so called Nelson Bank. Nelson led the way; these were probably the first private notes to be issued in New Zealand and other provinces were to follow. The notes were not a promise to pay on demand, as with cash notes, but in fact were payable 12 months after the date of issue. This way the notes did not contravene the Paper Currency Ordinance.
The notes were readily accepted by the Nelson colonists and used extensively for trading purposes. It was reported that in 1849 there were Nelson Bank notes circulating to the value of about 750 pounds. Had they been issued in England they would have been illegal, but in New Zealand there was nothing to legally prevent their issue and after some official scrutiny, they were given a tacit approval.
It was emphasized that the notes could not be used for payment to the Government of fines, fees or revenue demands although apparently they were generally accepted by government officials in Nelson.
So successful were the notes that a five shilling note was also issued a few years later. Just when Morrison and Sclanders ceased issuing their ‘ notes is not known, although it is possible that it was about the same time that the Union Bank re-opened its Nelson branch in April 1854. However, the Nelson Bank notes could well have continued for another two years as the Union Bank did not regain its right of note issue until 1856.
This article first appeared in the Nelson Weekly 19th October 2010
Do you have a story about this subject? Find out how to add one here.
Further sources - The Nelson Bank
- Sclanders & Co.Nelson Evening Mail, Volume XXXV, Issue 205, (1901 7 September), Page 2
- Matthews, K. (2003) Legal history of money in New Zealand. Retrieved from Royal Bank of New Zealand:
- Paper currency ordinance. Despatch from Earl Grey to Governor Grey on the Colonial Bank of Issue. (1849, May 26), p.2
- Whelan, H. (1995) David Sclanders: Nelson citizen merchant and banker (1995) Journal of the Nelson and Marlborough Historical Societies, 2,6