Homemade bank notes
In October 1861, a young English banker named Falconer Larkworthy was sent to establish an agency on the Otago Goldfields. However the newly formed Bank of New Zealand was waiting for its first official bank notes to be printed in Sydney.
Seeing gold buying opportunities all around him, Larkworthy knew he couldn’t wait for the notes to arrive. He went to Dunedin and bought as much ordinary writing paper as he could find, designed a bank note and had thousands printed.
Arriving at Wetherstons, he set up his agency in the canvas-covered grocery store. Larkworthy acquired almost 5,000 ounces of gold in just three days before returning to Dunedin for the official opening of BNZ's first South Island branch.
Meanwhile, a digger who had traded gold for the homemade notes attempted to pay for a bank draft. The notes were refused, claiming that they were forged. Outraged, the man returned to Wetherstons, demanding repayment from the storekeeper.
The storekeeper panicked and offered the miner 10 shillings in the pound in Union Bank notes. This action nearly provoked a riot, as word spread that the miners had been swindled out of their hard-earned gold. The police were called and the storekeeper was arrested.
When word reached Larkworthy, he quickly collected around 8,000 sovereigns – less than half of his liabilities at Wetherstons, and traveled to the goldfields. There, Larkworthy stacked his piles of sovereigns, with glimpses of more in the boxes behind him, and offered to exchange in full any BNZ note presented to him – for sovereigns, not gold dust.
News that the banker was standing by his notes spread quickly and of all the threatening mob- only one solitary digger turned up to change his notes into sovereigns.