When raw gold was presented at the Royal Mint in London it would be assayed (analysed), purified, alloyed to the gold quality used for coins, then struck into gold sovereigns each worth one pound. These sovereigns were then returned at full original gold weight to the depositor. Gold was turned into money free of charge.
Large deposits of gold were discovered in Australia in 1851, first in the colony of New South Wales and then, shortly after its separation from New South Wales, in the colony of Victoria. The chance of discovering great wealth attracted many to these gold fields including men from the colony of South Australia. These men withdrew their savings from the local banks in the form of sovereigns (South Australian bank paper money was not legal tender in New South Wales or Victoria, where most South Australians were headed). The withdrawal of savings in the form of gold sovereigns meant that the banks could no longer leave all of their paper money in circulation. By 1852, the economy of the colony was so weak that with few workers left, little gold coin, and the probability that the banks would need to withdraw their paper money from circulation (though how this could have been achieved is unclear), total ruin was imminent.
In response to this impending economic crisis, the South Australian government took the unprecedented step for a British colony (the Californians had taken the same step when faced with their own gold rush crisis a couple of years earlier) and authorized an Assay Office in Adelaide to buy gold from the Victorian fields and to strike it into gold one pound tokens pieces and ingots – both of which it authorized the banks to hold as legal reserve against their paper money issues. This was not legal as prior permission had not been sought from the British government. After the assay office had already commenced operation, the South Australian government then wrote to the British government seeking permission to take this step, and put the letter on a sailing ship bound for London.
While the letter was on its way, the South Australian banks had time to put their affairs into order. Some had branches in London so they arranged for their gold sovereigns to be shipped from there to Adelaide. They also became very active in buying and shipping in Victorian gold. In London, the British government recognized the seriousness of the situation in Adelaide and did not rush their decision on the best course of action to improve the situation. Finally, the British government took the decision not to grant the South Australian government’s request for an assay office, but by the time this reply reached South Australia, the Adelaide Assay Office had opened, saved the colony’s economy, and closed again.
The dies for the Adelaide Pound pieces were made locally by hand. The first attempt at striking the coins proved unsuccessful, as the die used to strike the pieces broke. On one face of the first pieces struck there is a small raised line of gold where the gold forced its way into the crack in the die.
A pair of dies for a five pound piece was also prepared. It may never have been used in 1852 other than for test pieces, certainly no original strikings have survived. However in 1918 the dies for the five pound piece were lent to the Melbourne Mint and a few pieces were struck for museums and collectors.