Facing a shortage of hard currency at home, the British government chose not to issue coinage for use in the penal colony. Instead, Governor Phillip was allocated three hundred pounds to use at his discretion, and some settlers brought coinage with them.
The government intended that produce from the official stores should serve as currency. But this approach failed because the colony lacked skilled agriculturalists able to adapt to the environmental conditions of their new home. Four years passed before the colony was able to produce enough food to sustain itself.
Early colonists traded with whatever coins reached New South Wales, such as Portuguese Johannas, half Johannas and Spanish silver dollars, Dutch guilders, Batavian ducats, Indian mohurs and rupees, Southern Indian pagodas, and English shillings. Many Spanish dollars were cut into pieces for use as smaller denominations; first quartered, and then further subdivided into pieces representing a shilling or sixpence, depending on size. Colonists also bartered with their skills and goods, especially foodstuffs.