AUSTRALIA'S oldest paper money will go under the hammer in Sydney later this month.

The only known specimen of the first official banknote issued in Australia was uncovered in a private collection in Scotland.

The ten shilling note, issued on the order of the NSW Governor in 1817 by the Bank of New South Wales (now Westpac) on the day the bank opened, is expected to attract bids from investors and collectors around the world.

"We have put a conservative estimate of a quarter of a million dollars on it in the catalogue," said Jim Noble of Noble Numismatics.

When Lieutenant-Colonel Lachlan Macquarie arrived in Sydney in 1809 he discovered a lack of a stable monetary system. A provisional local currency had evolved including promissory notes that were easily forged and often dishonoured, a mixture of overseas coins brought to the colony by visiting ships, and anything that could be used for barter, especially rum.

In 1816, Macquarie pushed ahead with plans to establish a bank without first gaining approval from London.

On March 22, 1817, the charter for the first bank in Australia signed by Governor Macquarie, was delivered to the bank's President.

On April 8, 1817 the Bank of New South Wales opened for business at 10am with 100 ten shillings notes issued on the first day.

In accordance with a decision recorded in the bank's minutes of that day, all notes were made payable to 'J. Lee or bearer'.

To read the complete article, see:The only surviving example of the first paper money issued in Australia to go under the hammer(www.news.com.au/national/nsw-act/the-only-surviving-example-of-the-first-paper-money-issued-in-australia-to-go-under-the-hammer/story-fnii5s3x-1226852603188)