Tables of Modern Monetary Systems by Kurt Schuler ( Return to home page )


Pitcairn Islands

Political sketch

An overseas territory of the United Kingdom.

Pitcairn Island is named for the British sailor who first sighted it in 1767. Its population of fewer than 50 people is descended from the mutineers of the British ship HMS Bounty and Tahitian women who accompanied them. The mutineers reached the uninhabited island in 1790 and were not found until discovered by American whalers in 1808. In 1831 the islanders were resettled to Tahiti, but many grew dissatisfied and returned to Pitcairn. The island became a port of call for whalers and passenger ships between the United States and Australia. In 1856, because of overpopulation, some of the islanders were removed to Norfolk Island. In 1898 the settlement was placed under the jurisdiction of the British High Commissioner for the Western Pacific, and in 1952 under the governor of the British colony of Fiji. When Fiji became independent in 1970, the British High Commissioner in New Zealand was appointed governor of Pitcairn, carrying out his duties through a locally elected island council. The economy of the islands consists of agriculture and sales of postage stamps and curios to tourists.

Wars since 1500

None.

Convertibility

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 abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.

New Zealand alone:

On 5 August 1914, shortly after the First World War began, an amendment to the Banking Act empowered the Governor-General in Council (that is, the cabinet), to issue a proclamation declaring any banknotes to be forced tender. While any such proclamation was in effect, coined gold could not be exported without the consent of the minister of finance. From 5 August 1914-5 November 1919, it was also prohibited to export uncoined gold without his consent. Immediately after the amendment passed, the government issued a proclamation making bank notes forced tender from 6 August-6 September 1914. The government extended the proclamation from time to time (New Zealand official yearook 1937: 572). New Zealand in effect resumed the gold standard when the United Kingdom resumed on 13 May 1925.

On 20 January 1933, the exchange rate was depreciated. Exporters received the new rate, which was more favorable to them, while exporters of capital continued to receive the old rate (New Zealand official yearbook 1937: 575). The dual rate ended on 1 August 1934. On 5 December 1938, New Zealand's government authorized the central bank not to convert notes into pounds sterling at the official exchange rate, thereby introducing exchange controls that became effective on 7 December 1938. In July 1939, the central bank introduced regulations that deferred remittances on all overseas funds except those for the national government and payment of foreign debt owed by local governments. (Local governments, as elsewhere in British colonies and former colonies, often issued securities in London.) Before July 1939, a system of permits for foreign exchange existed, but they did not limit the period during which remittances could be made. The Finance Emergency Regulations, April 1940, eliminated the free exchange market and forbade transactions at other than official rates. They were replaced by the Finance Emergency Regulations (No. 2), June 1940. Amendments introduced on 9 March 1950 greatly loosened controls as they applied to the sterling area.

New Zealand left the sterling area on 23 June 1972. It removed most exchange controls on 24 December 1984, and removed all remaining controls on 1 February 1990 (New Zealand official yearbook 1985: 790; IMF ARER 1991: 352).

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.

No exchange rate data in Reinhart and Rogoff (2003).

References

Primary sources:

--Laws and decrees:

Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.

Pitcairn Miscellany. 1959-present. Pitcairn Island: Pitcairn School.

--Publications of monetary authorities:

Reserve Bank of New Zealand. Annual report. 1935-present. Report of the First Ordinary General Meeting (1935); Annual Report of the Board of Directors and Statement of Accounts for the year ended 31^st March (1936, 1938, and 1952-1953); Report of the Board of Directors for the year ended 31^st March (1937 and 1939-1952); Annual Report of the Board of Directors and Statement of Accounts for the year ended 31^st March (1954-1964; this is from the title page; the cover says simply Annual Report); Annual Report of the Directors and Statement of Accounts for the year ended 31^st March (1965-1989); Annual Report and Financial Statements for the year ended 31^st March (1990-present). Wellington: Reserve Bank of New Zealand.

Reserve Bank of New Zealand. Bulletin. 1938-present. Statistical Summary (1938-1950); Bulletin (1951-present). Wellington: Reserve Bank of New Zealand.

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

<http://www.rbnz.govt.nz>, <http://www.federalreserve.gov>

--Other publications or Web sites:

Pitcairn Islands government, <http://www.government.pn>.

Main secondary sources:

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 the Pitcairn Islands, but some information can be inferred from data on New Zealand.)

Monetary authorities: Pitcairn Islands

Exchange rate arrangements: Pitcairn Islands