It's often thought that the Australian economy began when the First Fleet with Arthur Phillip in 1788 established the first British penal colony in Australia. This was when the economic growth really took off, but an economic system had existed before that event with the Aboriginals. So, the economic history of Australia spans many thousands of years with the last few centuries seeing the most activity.
The Need for Speed
When looking at economics at a historical standpoint it becomes evident that as technology progresses and the economy becomes more complex the faster events transpire. Hardly any change took place during the 40,000 year span of Aboriginal life on Australia and then the European colonisation escalated the pace of economic progress. In a few centuries a basic economy turns into a thriving national economy. Today the rate of economic progress is staggering with new advancements or events taking place almost daily.
Before the Europeans came, Australia was ruled over by the many Aboriginal nations that Australia was divided among. These nations ruled Australia over 40,000 years and they had a bartering economic system. With all societies some form of economic system had to exist. For the Aboriginals it was the basic bartering system.
What is Bartering
For those that don't know, bartering is the exchanging of goods between people. I give you a cow and you give me two sheep in exchange. Bartering has the problem of being slow, cumbersome and each party had to have something the other party wanted. These shortfalls in bartering limited the level of economic development for a bartering economy and the adoption of money is needed for economic progress.
Not Just Goods
The Aboriginals are known for their culture that is associated with the Dreaming and story telling. Well, Aboriginals traded in more then just the average goods and services. They also traded in songs, dances, stories and art. As these things involved connection to the land and the Dreaming they had a value of their own and so could be traded too.
Ores and Shells
The types of goods Aboriginals bartered in included mined ores and shells. Ores like red ochre from South Australia and Greenstone from Mount Isa and Cloncurry were mined and used to make tools like stone axes.
Trade Routes
The Aboriginals had a system of trade routes that lead to particular trade centres where commodities like spear, shields, fish hooks, stone axes, shells and ores were traded. The importance of the trade routes for Aboriginals extended further then just for trading commodities. The trade routes were also used to maintain law and relationships between tribes.
The trading centres could be used to resolve disputes, have meetings and share information on the Dreaming. The social aspect of the trade routes helped tribes to gain respect for each other by understanding their cultural differences and the rights and responsibility of each tribe.
Port Jackson (today Sydney, New South Wales (NSW)) on January 26, 1788 saw the First Fleet with Governor Phillip establish the first penal colony of NSW. The British declared ownership of Australia via terra nullius (meaning that the land never had been previously owned) and the European colonisation of Australia began. The Australian Economist Noel George Butlin would call this colony a “bridgehead economy” when discussing that this penal economy was the starting point for the creation of a very big and strong economy and country. 5
Establishment
The colony (Sydney) was at first meant to be at Botany Bay, but moved as this area was infertile. The fleet brought with them many supplies along with 1,000 convicts as settlers. These prisoners were sent to Australia to deal with prison overpopulation back in England. The colony would fair poorly with a weak economy in it's first few years. This was for the following reasons:
For the colony to survive they had to establish agriculture, which become the foundation of the early Australian economy. The governors had originally been the main drivers for the economy by providing most of the supplies like money and management for the economy. But in the 1800's the private sector (non-government sector of economy, which is run and owned by private individuals) finally started developing with the government owned public sector becoming a smaller proportion of the overall economy. During the early 1800's more land was given to the private sector and the variety of skills for the colony increased as a greater number of convicts and migrants arrived.
The Monetary Systems
Rum, which was first brought to NSW in 1792 on the The Hope, was the first currency used by the colony and it wasn't until 1813 when coinage started circulating in the form of Spanish silver dollars. By 1829, this was replaced by a monetary system similar to the British Pound, Shilling and Pence monetary system. Australia issued it's first own currency in 1910, which was the Australian Pound and in February 14, 1966, Australia established the Australian Dollar.