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Norfolk Island

Political sketch

An external territory of Australia.

Norfolk Island was uninhabited when discovered by the English captain James Cook in 1774. He named the island for the Duke of Norfolk. It was claimed by the Australian colony of New South Wales in 1788 and settled by a small party, including 15 convicts. After 26 years as a British prison colony, the island was abandoned in 1814 and the population was moved mostly to Van Diemen's Land (now Tasmania). From 1825 to 1855 it was re-established as a prison colony, until the convicts were again moved to Tasmania. In 1856 the population of Pitcairn Island, descendants of the mutineers from the HMS Bounty, was resettled on Norfolk. Not all of the islanders settled happily on Norfolk; two small parties returned to Pitcairn. Norfolk Island was separated administratively from the mainland of Australia on 24 June 1856. In 1897 the governor of New South Wales became the administrator, though the island remained a separate British colony. On 1 July 1914 Norfolk became a territory of Australia, which had become a nation only a few years before. An airfield constructed on the island during the Second World War gave Norfolk Island a link with the outside world. The present administrative system was established in August 1979, clarifying some points left unclear in earlier law. Since the mid 1960s the major economic activity of Norfolk Island has been tourism.

Wars since 1500

None.

Convertibility

As a territory of Australia, exchange controls in effect in Australia applied on Norfolk Island.

The sterling area:

On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.

The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.

Australia and territories using its currency:

Australia imposed an embargo on shipments of gold from 14 July 1915, after the First World War had begun, through 24 April 1925 (Australia, proclamation of 14 July 1915). Australia imposed exchange controls on 28 August 1939, shortly before the Second World War began. In January 1976 Australians became free to buy and sell gold in Australia; previously, they had been required to sell it to the central bank within one month. Australia removed most exchange controls on 12 December 1983, in conjunction with a managed float of the Australian dollar (Australia, Treasurer's announcement of 9 December 1983). On 1 July 1990 Australia abolished regulations pertaining to the export of Australian notes and coins.

Australia left the sterling area on 23 June 1972.

The monetary area of Australia included Papua and New Guinea from the First World War until Papua New Guinea left it on 1 January 1976.

Other

Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): None.

Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): None.

Frankel and Rose (1996) list of currency crashes: Country not listed.

References

Primary sources:

--Laws and decrees:

Australia. Gazette. 1901-present. Commonwealth of Australia Gazette (1901-1973; also titled Commonwealth Gazette); Australian Government Gazette (1973-1977); Commonwealth of Australia Gazette (1977-present). Canberra: Commonwealth Government Printer (1901-1979); Australian Government Publishing Service (1979-present).

Norfolk Island. Gazette. Free France, 1943-1944; France, 1944-present (irregular). Government Gazette. Norfolk Island (1943-1957); Norfolk Island Government Gazette (1957-present). Norfolk Island: Territory of Norfolk Island (1943-1957); Norfolk Island Government Gazette (1957-present).

--Publications of monetary authorities:

Commonwealth Bank of Australia. Annual report. 1912-1960. Aggregate Balance Sheet of the Commonwealth Bank of Australia (1912-1927); Balance Sheet of the Commonwealth Bank of Australia; and, Balance Sheet of the Commonwealth Savings Bank of Australia (1928-1941); Balance Sheet and Director's Report / Commonwealth Bank of Australia and Commonwealth Savings Bank of Australia (1942-1944); Report and Balance Sheets (1945-1959); Report and Financial Statements (1960). Sydney: Commonwealth Bank of Australia. (This report includes information about the Notes Issue Board during its existence from 1920-1924).

Commonwealth Bank of Australia. Bulletin. 1937-1959. Statistical Bulletin. Sydney: Commonwealth Bank of Australia.

Reserve Bank of Australia. Annual report. 1959/1960-present. Report and Financial Statements (1959/1960-1999); Annual Report (2000-present). Sydney: Reserve Bank of Australia.

Reserve Bank of Australia. Bulletin. 1960-present. Bulletin (1960-1981); Statistical Bulletin (1981-present). Sydney: Reserve Bank of Australia.

--Web site of the current monetary authority (viewed January 2005):

<http://www.rba.gov.au>

--Other publications or Web sites:

Australia. Official yearbook. 1901/1907-present. Official Yearbook of the Commonwealth of Australia (1901/1907-1972); Official Yearbook of Australia (1973-1977); Year Book, Australia (1978-present). Canberra: Commonwealth Bureau of Census and Statistics (1901/1907-1977); Australian Bureau of Statistics (1978-present). (Contains information on Australia and on Australian territories and mandates.)

Norfolk Island. Administrator. Annual report. 1963/1964-present. Annual Report on the Territory of Norfolk Island for the Period 1 July ...to 30 June ... (1963/1964-1974/1975); Annual Report on Norfolk Island for the Period 1 July ...to 30 June ... (1963/1964-1974/1975) Canberra: Department of Territories (1975/1976-1978/1979); Norfolk Island Report (1980-present; 1987/1988 has title Norfolk Island Administration Annual Report ). Canberra: Australian Government Publishing Service (1975/1976-1978/1979). Norfolk Island: Photopress International (1980-present).

Norfolk Island government, <http://www.norfolk.gov.nf>.

Main secondary sources:

Holder, R[eginald] F[rank]. 1970. Bank of New South Wales: A History, 2 v. Sydney: Angus and Robertson. (The pages of the volumes are numbered consecutively.)

IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.) (No direct information on Norfolk Island, but some information can be inferred from data on Australia.)

Treadgold, M[alcolm] L[loyd]. 1988. Bounteous Bestowal: The Economic History of Norfolk Island. Pacific Research Monograph No. 18. Canberra: National Centre for Development Studies, Research School of Pacific Studies, Australian National University.

Monetary authorities: Norfolk Island

Exchange rate arrangements: Norfolk Island