Holey dollar

Holey dollar is the name given to coins used in the early history of two British settlements: Prince Edward Island (now part of Canada) and New South Wales (now part of Australia). The middle was punched out of Spanish dollars, creating two parts: a small coin, known as a "dump" in Australia, and a "holey dollar". This coin was one of the first coins struck in Australia.

From 1497, the Spanish government started to mint a large silver coin that, through wide circulation, became known as the Spanish dollar. It was also known as the peso of eight reales, or Piece of eight royals.

Around the end of the 18th century, the Spanish dollar was in constant circulation in Eastern Canada and the United States. The value of the coin varied in different centers but was highest in Halifax. Therefore, whenever the merchants of Prince Edward Island (PEI) secured them, they sent them to Halifax to take advantage of the higher rate. The resulting shortage of money in PEI prompted the governor in 1813 to gather in all the Spanish dollars he could and have their centers punched out. Both the central plug and rims were stamped with a sunburst. The punched centers passed as shillings and the outer rims as five-shilling pieces. The combined value of the mutilated coins was thereafter 20 percent greater in PEI than outside the island (and the individual components less valuable), so as a consequence, the coins became the official currency in PEI.

When the colony of New South Wales was founded in 1788, it ran into the problem of a lack of coinage. Foreign coins – including British, Dutch, Indian and Portuguese - were common in the early years, but much of this coin left the colony by way of trade with visiting merchant ships.

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