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About the ReseRve bAnk MuseuM 1

ReseRve bAnk MuseuM

About the

Introduction 3

Origins and development of the museum 4 Opening ceremony

Timelines, feature window and the balancing act 6 Timelines

Feature window: Sir Edmund Hillary

The balancing act

Bill Phillips and the MONIAC 10 About Bill Phillips

Artefacts and memorabilia 13 Reserve Bank Building brochure and plaques

Silver platters

Reserve Bank Coat of Arms

Interactive and audio-visual 15 Inflation calculator

Bloomberg monitor

Recordings

Contents

Copyright © 2008 Reserve Bank of New Zealand

ISBN 978-1-877466-00-7 (print)

ISBN 978-1-877466-01-4 (online)

2 About the ReseRve bAnk MuseuM

Currency function 16 Counterfeit notes and polymer security features

Replica vault door

One million dollars

Circulating coin dies and blanks

Numismatic collection 18

Commemorative and proof coin selection

Merchants’ tokens

Series 1 Reserve Bank notes

Bank of Aotearoa one pound note

FitzRoy promissory note

1935 pattern Waitangi crown

Temporary exhibitions 20

FuRtheR ReAding

— The Reserve Bank and New Zealand’s Economic History

— Explaining Monetary Policy

Print editions are free of charge by request from the Reserve Bank Knowledge

Centre, or download a PDF from http://www.rbnz.govt.nz/publications/index.html

Photography by Stephen A’Court unless otherwise noted.


intRoduCtion

The Reserve Bank Museum is

the only specialist economic

and central banking

museum in New Zealand,

designed to educate and

inform, highlighting and

celebrating New Zealand’s

wider economic and banking

history, as well as the origins

and role of the Reserve Bank.

Top: Reserve Bank building

and museum frontage.

Above: Displays in the

Reserve Bank Museum,

Directors’ tea set at left,

MONIAC econometric

computer on right,

Sir Edmund Hillary display

window in background.

Left: The banking display

panels in the museum.


oRigins And developMent

oF the MuseuM

The decision to establish

a banking and economic

museum in the Reserve

Bank of New Zealand was

taken during 2003-04,

following the development

of similar museums by

central banks overseas, and

the introduction of museums

by government departments

such as Parliamentary

Services.

Development took approximately two

years and drew on the skills and expertise

of a wide range of Bank staff as well as

an architecture firm, and specialist design

consultants 3D Design and Management

Ltd.

Perhaps the most challenging task

was selecting appropriate artefacts. The

Reserve Bank has a significant collection

of memorabilia and historical material,

ranging from historical ledgers to old

calculating machines, monogrammed

Noritake chinaware and works of art. Not

all could be displayed. A representative

cross-section was eventually selected,

including note stitching apparatus, scales,

and the memorial to Bank staff who lost

their lives during the Second World War.

Another difficult task involved selecting

highlights from the Bank’s small but

relatively valuable numismatic collection.


opening CeReMony

The museum was opened in September

2006 by Peter Hillary, on behalf of his

father Sir Edmund. Around 10,000 people

visited during the first 18 months of

operation. During that time the museum

also acquired a new exhibit, the MONIAC,

on long-term loan from the New Zealand

Institute of Economic Research; and

hosted two temporary exhibitions.

Top right: Peter Hillary formally opens the

museum on behalf of his father, Sir Edmund.

Right: Reserve Bank Governor, Alan Bollard,

addresses the audience.

Below: The Museum interior, September 2006.


tiMelines, FeAtuRe window And the bAlAnCing ACt

The museum space includes

three major display bays

covering aspects of the

economy, the banking

system, the history of

the Reserve Bank and

numismatic displays. It also

includes a range of displays

around the walls, which

extend and give context to

the exhibits.

tiMelines

Timelines on the walls of the museum

offer brief summaries of key events in

New Zealand’s economic, central banking

and currency history, giving a wider

context with which to understand both

our economic past and the specific origins

and history of the Reserve Bank.


FeAtuRe window:

siR edMund hillARy

Prominent New Zealand mountaineer,

explorer, diplomat and tireless benefactor

of Nepal, Sir Edmund Percival Hillary

(1919-2008) KG, ONZ, KBE, was the first

man to climb Mount Everest in May 1953,

with Tenzing Norgay. After an initial effort

to reach the summit failed, expedition

leader John Hunt sent Hillary and Tenzing

to make the attempt. Hillary found a way

up a rock face, later known as the ‘Hillary

Step’, and they reached the summit on 29

May. The news reached Britain on the day

H.M. Queen Elizabeth II was crowned, and

Hillary was knighted for his achievements.

He led a further expedition into the

Himalayas the following year.

In 1958, as part of the massive

Commonwealth Trans-Antarctic Expedition

under Dr Vivian Fuchs, Hillary established

Scott Base on the Ross Sea. He then

became the first to drive overland to the

South Pole – leading a small New Zealand

team to transport supplies for Fuchs, who

intended to drive across from the Weddell

Sea. Although equipped only with

modified Massey Ferguson TE-20 tractors

and a Studebaker M-29 ‘Weasel’, Hillary

made a daring push for the pole, arriving

at the US base a fortnight ahead of

Fuchs in his Tucker Sno-Cats. Hillary was

awarded the Royal Geographical Society’s

Founder’s Gold Medal for 1958.

Above: The Hillary feature window, seen here soon

after the Museum opened in 2006.


During the early 1960s, Hillary spent

extended periods in the Himalayas, joining

a number of scientific expeditions and

then working tirelessly on behalf of the

Sherpa people to build further schools,

hospitals, a bridge and even an airfield.

This humanitarian work became a passion,

but tragedy struck in 1975 when his wife

Louise and youngest daughter Belinda

were killed in an air crash in Nepal. Hillary

was hard-hit by the loss, but continued his

work. In 1977 he led a jet-boat expedition

from the sea up the Ganges to the

Himalayas, and in 1985 – with astronaut

and lunar pioneer Neil Armstrong – he

flew to the North Pole. In 1989 he married

Jane Mulgrew, widow of his friend Peter

Mulgrew.

Hillary’s achievements and work made

him a highly respected household name

in New Zealand and Nepal. He was made

High Commissioner to India in 1984, three

years later appointed to the Order of New

Zealand, and in 1995 was made a Knight

of the Garter – a rare honour. He was

selected to feature on the New Zealand

five dollar note in 1992, becoming the

only living person to appear on a New

Zealand banknote other than H.M. The

Queen. At Hillary’s request the design

included Mount Aoraki (Cook) and the

tractor he drove on his epic polar crossing.

The extremely large reproduction of the

note on the museum window highlights

Hillary’s portrait and reveals some of

the detailed artistic features of the New

Zealand sixth series banknotes.


the bAlAnCing ACt

The rear wall of the museum has been

dubbed the ‘Balancing Act’ and is

designed to highlight the wide range

of tasks and functions performed by

the Bank under the Reserve Bank Act

1989. The Bank has roles that range

from formulating monetary policy to

monitoring and supervising the health

of the financial system, maintaining

foreign reserves, operating in the financial

markets if necessary, and issuing currency

as required. Aspects have since been

refined by subsequent amendments. It is

very much a balancing act, symbolised by

scales from the Bank’s collection.

New Zealand’s monetary policy

framework is conventional by current

international standards, designed around

an overall goal of price stability. Price

stability itself is defined by a Policy Targets

Agreement, which at the time of writing

required the Bank to keep consumers’

price index (CPI) inflation between 1 and

3 percent on average over the medium

term.

The Bank’s role in the New Zealand

financial system has developed over

the years, and includes a requirement

that banks must be registered with the

Reserve Bank. Registered banks must

meet certain criteria in regard to their

financial position, and only organisations

formally registered with the Reserve Bank

are entitled to use the word ‘bank’ in

their names. In late 2007 the decision

was taken by government to extend the

Bank’s regulatory oversight to finance and

insurance companies, building societies

and credit unions.

The Bank also operates New Zealand’s

wholesale payment and settlement

systems, which registered banks use to

complete their transactions with each

other, and which handle approximately

$40 billion in transactions per day. These

systems are vital to the New Zealand

economy, and also allow the Bank to

implement its monetary policy settings.

Above and opposite: In balance. Historic scales from

the Bank collection are a metaphor for the

‘balancing act’ of 1989, legislation that gives the

Reserve Bank a range of important roles.


bill phillips

And the MoniAC

The MONIAC was developed by New

Zealand economist and inventor Bill

Phillips (1914-1975) and was first

displayed at the London School of

Economics in 1949. This particular

example is the first to be built, and is on

long-term loan from the New Zealand

Institute of Economic Research.

MONIAC is an acronym for ‘Monetary

National Income Analogue Computer’.

Operating on analogue principles, the

MONIAC was one of the world’s first

computers designed to simulate economic

phenomena, and could perform logical

functions that no other computer of the

day could match, due to a combination

of its analogue calculation principles and

the use of water flows as the calculating

medium.

Phillips built the MONIAC on Keynesian

and classical economic principles,

showing the circular flow of income,

expressed mathematically as Y = C + I

+ G + (X-M) (income equals household

expenditure plus business investment

plus government expenditure plus export

sales, less purchase of imports). Separate

water tanks represent households,

business, government, and the exporting

The MONIAC hydraulic computer

is the sole working example of its

type in the southern hemisphere

and one of only fourteen known

to have been built.


and importing sectors of the economy.

Coloured water pumped around the

system measures income, spending and

GDP. The system is programmable and

capable of solving nine simultaneous

equations in response to any change

of the parameters. A plotter can record

changes in the trade balance, GDP and

interest rates on paper.

Simulation experiments with fiscal

policy, monetary policy and exchange

rates can be carried out. Although the

MONIAC was conceived as a teaching

tool, it is also capable of generating

economic forecasts.

Although the MONIAC remains an

important contribution to our economic

history, Phillips is probably better

remembered for his development of the

Above: The MONIAC under refurbishment in the

Reserve Bank workshops. (RBNZ)

Below: Reserve Bank Governor Alan Bollard outlines

the operations of the MONIAC to Reserve Bank staff.


Phillips Curve, which shows an inverse

relationship between unemployment

and inflation, which he developed in the

1950s. The Phillips Curve relationship

became a significant part of economic

policy analysis in the developed world

over the next generation.

Although the MONIAC is not used for

policy analysis at the Reserve Bank, large-

scale, practical macroeconomic modelling

has long been part of the research and

policy effort.

About bill phillips

Alban William Housego Phillips

remains one of New Zealand’s best

known and most accomplished

economists. Brought up on a dairy

farm after the First World War, he

spent time in Australia and then

went to China in 1937, then studied

electrical engineering in Britain.

When the Second World War broke

out Phillips joined the Royal Air Force

and was posted to Singapore. He was

ultimately captured by the Japanese

and imprisoned in a POW camp. He put

his engineering skills to use, building a

miniature radio among other devices.

At war’s end, Phillips was awarded a

New Zealand Forces scholarship. With

these funds he attended the London

School of Economics (LSE) from 1946.

It was here that he developed the

MONIAC.

In 1967, Phillips moved to Australia

and took up a position in the Australian

National University. He suffered a

stroke two years later and retired to

New Zealand, where he taught at the

University of Auckland. Phillips died in

March 1975.

Bill Phillips with the prototype MONIAC.

(London School of Economics LSE/LSE History

Photographs/6/2/P)


Artefacts and memorabilia from

the Bank’s past are displayed

around the museum.

They include official Bank wax seals, with

the wax and seal press; a nib pen used

to write board minutes during the 1960s;

and a cigarette lighter that was in use

until the Reserve Bank became smoke-free

in the late 1980s.

ReseRve bAnk building

bRoChuRe And plAques The Reserve Bank building at 2 The

Terrace was built on the former site of the

Congregational Church. A painting of this

church is on display in the museum along

with a comemorative plaque that stood

for many years in the Reserve Bank foyer.

A booklet issued to mark the opening

of the Reserve Bank building is also on

display, and includes various interesting

facts about the building.

Designed by Allied Architects,

incorporating Mitchell and Mitchell and

Partners, and Calder, Fowler and Styles,

the building took almost seven years to

complete and was officially opened in July

1972.

silveR plAtteRs

The engraved silver platters on the

rear wall of the museum, flanking the

‘Balancing Act’, were presented by the

Bank of England in 1934 to mark the

opening of the Reserve Bank. They stood

for many years in the Board Room.

ARteFACts

And MeMoRAbiliA


ReseRve bAnk CoAt oF ARMs

The Bank took the decision to seek a

formal Coat of Arms in 1960. A warrant

was issued on 24 October 1961 and

Letters Patent affixed on 1 June 1965.

The Letters Patent are on display in the

museum. A large-scale metal relief version

of the crest is mounted nearby, taken from

the Reserve Bank building in Christchurch

when that branch closed in 2000. Another

is mounted at the far end of the Reserve

Bank foyer, and the Reserve Bank logo

embodies a stylised form. The crest has

historical significance for the Bank for a

variety of reasons, not least because the

bull’s head, fleece and ship also reflect

the pastoral imperatives of New Zealand’s

mid-twentieth century, when the crest was

developed.

Above: Sketch drafts of the proposed

Reserve Bank Coat of Arms.

Left: A watercolour draft sketch of the

proposed Reserve Bank Coat of Arms.

Mid-twentieth century imagery

characterises all these sketches.


inFlAtion CAlCulAtoR

The inflation calculator allows the user

to compare price indices between any

two dates for which figures are available.

A number of price indices have been

programmed into the database, including

the general Consumers Price Index (CPI),

food price index and clothing.

The CPI records changes in the price of

a nominal ‘basket’ of goods and services

purchased by an ‘average’ New Zealand

household. The rate of change between

the CPI price level today and the CPI price

level one year ago is commonly referred

to as the inflation rate, or sometimes

‘headline CPI inflation’.

The calculator is not designed to

estimate changes in the level of prices of

assets or the prices of assets or individual

goods or services, as these can change by

significantly more or less than the change

in the CPI. An article in the December

2003 issue of the Reserve Bank Bulletin

further discusses the calculator.

The calculator presumes that if a date

prior to July 1967 is selected then the

denomination is pounds; if a date after

that is selected the denomination is

presumed to be dollars. At decimalisation,

£1 = $2. The calculator only works with

decimals, so an amount like £5.11.6

needs to be input as 5.575 (£5 + 11.5/20

shillings).

The figures produced by the calculator

are guides only and should not be

regarded as ‘official’ Reserve Bank

calculations. The Reserve Bank accepts no

liability or responsibility for any errors or

for any use to which the resulting figures

may be put.

inteRACtive

And Audio-visuAl

blooMbeRg MonitoR

The Bloomberg monitor above the time-

line provides a real-time view of the

currency markets.

ReCoRdings

A range of oral histories were collected

from former Bank staff and other

individuals who played an important role

in the economy.


The Reserve Bank has had the

sole right to issue New Zealand

bank notes since its inception in

1934. The right to issue coins

was passed from The Treasury

in the late 1980s. Artefacts on

display in the museum include a

set of note printing plates, and

draft sketches of the third series

decimal notes.

CuRRenCy

FunCtion

CounteRFeit notes And

polyMeR seCuRity FeAtuRes

A few of the counterfeits the Reserve

Bank has collected over the years are on

display here, along with details of some

of the security features in the current

note series. New Zealand was one of

the first countries in the world to adopt

polymer for its banknotes; the notes are

more durable than cotton-based paper

notes and offer superior security features.

Displays highlight some of the security

features of New Zealand’s modern notes.


Above: Replica

vault door.

Right: The

cancelled

million dollars.

Below: Coin

dies.

RepliCA vAult dooR

The replica vault door is indicative of

doors securing vaults such as those below

the Reserve Bank building. A core sample

of the steel-and-concrete vault wall is

displayed nearby.

one Million dollARs

Ever wondered what a million dollars

in fifties looks like? That is what is on

display inside the cage. Although real,

the notes have been cancelled and are

valueless. Nearby, a plastic tube contains

half a million dollars in ground-up notes.

CiRCulAting Coin

dies And blAnks

Some of the dies used to make the first

decimal circulating coins are displayed

in the museum, along with some of the

blanks from which the coins are made,

and cases of old two cent pieces. These

are long since demonetised but highlight

the way that coins have been stored and

handled by the Reserve Bank over the

years. Also on display, and of particular

interest, are samples of a one dollar coin

proposed for the 1967 decimalisation

release. This was never issued and the

current one dollar coin, produced more

than two decades later, is a quite different

size and design.


nuMisMAtiC

ColleCtion

The Reserve Bank owns a

small collection of notes

and coins, some of which

are on display in the

museum.

In many respects, this collection is

incidental to the Bank’s ordinary business;

as sole producer of New Zealand’s

banknotes since 1934, the Bank has by

nature produced a fair range of material

of numismatic interest. However, the

collection also includes a range of other

notes and coins, such as the one pound

notes issued in the 1860s and 1870s by

the Bank of Otago, Bank of Auckland,

and Bank of New Zealand. Some of these

are displayed in the museum. Other rare

and important examples of New Zealand’s

wider numismatic history include those

featured below.

CoMMeMoRAtive And

pRooF Coin seleCtion

This is a selection of coins issued by the

Bank over the years to commemorate

various events, along with other coins

from the Bank’s collection. These include

one dollar collectors’ coins from 1970,

1974, 1978, 1983 and 1986; a ‘Benz’

gold coin from 1998; a complete proof set

from 1937, and an issue set from 1965.

Opposite: Top, merchants’ token. Centre: Reserve

Bank Series 1 fifty pound note. Bottom: Bank of

Aotearoa one pound note.


MeRChAnts’ tokens

In the early colonial period there was

no formal New Zealand currency, and

British pounds, shillings and pence

were commonly used. Promissory notes

appeared to help fill the gap, and so

did merchants’ tokens. These were

redeemable from the issuing merchant.

Because many were not redeemed in

practice, they provided a source of

profit in some cases. The Bank collection

includes examples by Jones and

Williamson, J. Caro & Co., Edward Reece

and Milner and Thompson.

seRies 1 ReseRve bAnk notes

The first series of Reserve Bank notes were

designed in 1933 and issued the following

year on a temporary basis until a more

permanent series could be developed.

A complete set of Series 2 Reserve

Bank notes from 1940, the intended

lasting design, is also on display in the

museum. These notes were first issued

in 1940 and remained in circulation until

decimalisation in 1967.

bAnk oF AoteARoA

one pound note

Tukaroto Matutaera Potatau Te

Wherowhero Tawhaio (?-1894) was the

second Maori king. In the early 1880s

he founded the Bank of Aotearoa, which

issued this one pound note. His reasons

for doing so at that stage, after the

end of the New Zealand Wars period,

probably reflected the politics of the

period. In the event, however, the note

was never circulated, and the specimen

here is one of only three known to exist

today. Tawhaio’s role in issuing this note

prompted his inclusion on BNZ circulating

notes, and later on the first series Reserve

Bank of New Zealand notes.


From time to time the Bank holds

temporary exhibitions. These have

included the work of Reginald George

James Berry, responsible for thousands of

stamp and coin designs; and a dress from

the World of Wearable Arts Awards of

2006 featuring the withdrawn five cent

coin. This was designed by Hutt Valley

artist Amilie Taylor and included 642 five

cent coins.

teMpoRARy

exhibitions

Above: James Berry exhibition,

late 2007. Right: Amilie Taylor

and her five cent dress (RBNZ).

FitzRoy pRoMissoRy note

Robert FitzRoy, former Captain of HMS

Beagle and Governor of New Zealand

from 1843-1847, issued promissory

notes to fund his impoverished colonial

government. He went beyond his brief by

doing so, and the decision contributed to

his sacking in 1847 by the Colonial Office.

1935 pAtteRn

wAitAngi CRown

This rare ‘pattern’ crown differs from the

‘issued’ Crown, notably in the size of the

crown between the heads of Governor

William Hobson and Nga Puhi chief Tamati

Waka Nene, and in the length of Nene’s

clothing.

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