The army’s indifferent attitude and venality became big problems when they started using alcohol as currency instead of regular money. So, trade between some sections was a barter system based on rum. for example, one person would buy groceries, clothes, or commodities in exchange for a certain amount of rum.
The first British settlers came to Australia in the late 1700s, and there are some crazy stories dating back to that era. The colony they established in New South Wales had around 7000 inhabitants, and it wasn’t in great shape. The army that accompanied those settlers was not "doing their job properly," and the colony muddled along for over a decade.
The army’s indifferent attitude and venality became big problems when they started using alcohol as currency instead of regular money. So, trade between some sections was a barter system based on rum; for example, one person would buy groceries, clothes, or commodities in exchange for a certain amount of rum. Expectedly, this began causing friction and some amount of disorder within the colony. The army corps that traded using rum would become known in history as the "rum corps." They effectively held a monopoly on rum and, thus, on the de facto currency since 1792—rum. Some sources claim the rum was imported from India.
This benefited the army in a big way because it controlled the colony’s entire economy. The person who profited the most was one John Macarthur, an army officer who had a part in the flow of rum. Since currency notes and coins were in short supply, the barter system was developed by those who had access to the main commodities – food, clothing, and alcohol. Convicts and lower-ranking officers were often paid in goods, mostly rum.
Alcohol and power never lead to good news. Word of this building chaos reached the authorities back in England. So, Joseph Banks, President of the Royal Society in England and a backer of the colony of New South Wales, recommended that William Bligh (yes, the captain from Mutiny on the Bounty, who was mutinied against) be put in charge of the colony because he was a "strict disciplinarian."
Banks trusted Bligh would sort our matters at the chaotic colony and establish order. Bligh arrived at the colony in 1806, where he saw a colony that was indeed in shambles. He had a reputation for being a hard man (courtesy of the mutiny story aboard the Bounty) and believes he has to take control and resolve issues quickly. He goes all in on his first big decision—he bans rum as a form of currency. From that day forward, no one in the colony was permitted to use rum as a form of payment. It was no surprise, then, that it led to a lot of anger among the army troops stationed at the colony. The army did not take to Bligh from the start, and the rum ban only widened the chasm.
The other big name in the colony, John Macarthur, owned 5000 acres of land in the region. He believed he was owed another 5000 acres by royal decree and approached Bligh regarding the land he felt he was owed. Bligh refused to grant Macarthur any land, earning himself another powerful enemy. Macarthur had been in the army and was also a prominent civilian. He was heavily invested in the rum-as-currency business, distributing cheap rum among the army corps. For all intents and purposes, Macarthur was a vital cog in the rum monopoly in New South Wales.
The two had more run-ins, and, in 1808, Bligh had Macarthur arrested on a criminal charge. Things came to a head when one of the convicts on a ship Macarthur owned escaped. That was a criminal offense called desertion, and both the captain of the ship as well as the owner were culpable.
Meanwhile, Bligh, a stickler for regulations, was busy making more enemies. He pulled down any houses or structures that he thought were built illegally. As one expert put it, "he would just go in, drag the family out even if they were living there, and knock down their houses in front of them." These measures made Bligh a very unpopular governor.
Macarthur had enough of Bligh’s strict governance. He approached Major George Johnston, the head of the army corps in New South Wales, and recommended the army stage a coup and take over the colony. Johnston was no fan of Bligh; he wanted the army’s rum monopoly to continue. But he was reluctant to take such a drastic step and refused. As the desertion case against Macarthur proceeded, only one out of seven court officers supported Bligh, while the other six supported Macarthur. Bligh called this a mutiny (do you see a pattern?), but Macarthur is set free. A livid Bligh demanded a meeting with Major Johnston, which the army chief turned down. It was unusual for the head of the army to refuse a meeting with the head of the government.
Then, matters went beyond all control – you can decide for yourself if it was a drama, a tragicomedy, or an outright farce. Bligh, having reached the end of his patience, charged the six court officers with treason and imprisoned Macarthur. Major George Johnston was having none of it. He was already annoyed that rum was no longer the currency. He went with his men to free Macarthur from prison, and then stormed the government house where Bligh lived. They searched high and low, but hours went by and they couldn't find Bligh. Legend has it that they eventually pried him out from under a bed in Government House. They marched him outside, showed him a list of legal charges, and said they were arresting him for the crimes he had committed! The document was signed by Major Johnston as the "acting governor." Bligh is placed under house arrest for one year, beginning in January 1908. Eventually, Johnston appoints another officer, Colonel Patterson, as acting governor.
Patterson, an old enemy of Macarthur, charges Johnston for his crimes and ships him off to England, where he’s charged with treason. He also sent Bligh back to the mother country. Johnston was found guilty, but he was only sacked and not sentenced to death. And that was it. The rebellion ended in a whimper, and the man who staged a coup was pretty much left alone to live free, while William Bligh had two mutinies against his name.
The Rum Rebellion remains the only coup d'état in Australia’s history. And to think, it all happened over the choice of rum as a replacement for actual money.