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The Cyclopedia of New Zealand [Wellington Provincial District]

Bank of New South Wales

Bank of New South Wales, Head Office, George Street, Sydney; Directors, Messrs. J. R. Hill (President), C. Smith, T. Buckland, T. Cadell, R. C. Close and J. T. Walker; General Manager, Mr. J. Russell French; Head Office for New Zealand, Lambton Quay, Wellington; New Zealand Inspector, Mr. W. G. Rhind. The Bank of New South Wales was established in 1817, now nearly eighty years ago. To those who remember that the colony from which this bank receives its name, celebrated its centenary some eight years ago, it seems strange that for nearly thirty years of its existence it struggled along without a bank. The fact, however, becomes less remarkable when viewed in the light of the population statistics of the time. In 1817, when the Bank of New South Wales was established, the population of Sydney was about 5000, considerably less than that of Nelson to-day, while the white population in all Australia numbered only 15,000, much less than half that of the city of Wellington. Of the character of the people little can be said. When the population was about 10,000 it was deemed necessary to keep 1100 British soldiers to look after them. Wool growing had, however, been proved a highly payable industry by Mr. John Macarthur, whose merino sheep were the decendants of a small parent stock presented to him by King George III. from that monarch's own flock, and Mr. Macarthur's example was being followed by a fair number, thus giving ample employment to both convict and free settlers. The wool and other industries springing up rapidly made a bank of some kind among the most desirable objects of attainment. That the quantity of British coins in circulation there was surprisingly small, may be gathered from the noteworthy fact, that the Bank of New South Wales was started and conducted for nearly nine years on the dollar currency. In the year 1893 a $20 note was presented for
Bank Of New South Wales, Wellington.

Bank Of New South Wales, Wellington.

page 497 payment. The interesting document was issued on the 1st of January, 1824—nearly seventy years before. If that sum had been invested in the capital of the bank and the dividends that would have accrued upon it been re-invested half-yearly, it would in that time have amounted to a sum which would almost have made its possessor a millionaire. At 17 1/2 per cent., which was about the average dividend of the Bank of New South Wales during the seventy years currency of that note, its face value would have been doubled seven times, reaching at last to the astonishing sum of $2,621,440. At ten per cent. it would have doubled only ten times and would have amounted to only $20,480. Had the sum been placed in a savings bank at four per cent. interest, added annually, it would have accumulated to about $300. As may be inferred from the dollar currency, this bank was not a London creation. It was established by the early colonists as a joint stock
Mr. E. S. Hall.–Cashier, 1817.

Mr. E. S. Hall.–Cashier, 1817.

co-partnership with the concurrence and consent of the popular Governor of that period, Major-General Lachlan Macquarie. The capital of this first born of Australasian financial institutions represented something under £400 of British money—truly a modest beginning, in view of its present gigantic proportions. But colonial transactions were all small in those days. The first balance-sheet of the bank covering the period from its establishment on the 5th of April, 1817, to the 31st of December of that year, is a curiosity of miniature banking. The Bank of New South Wales of to-day must have many individual accounts each exceeding in volume the business of the whole bank in those days. In this first balance-sheet the specie in hand is grouped with bills on Treasury store receipts, making a total of £3613 2s. 10d. The bills under discount stood at £5693 5s. 1d., and the mortgages show a total of £1381. But the expenses were on a similarly small scale. The office goods and furniture stand among the assets of the bank at £340 10s., and salaries, wages, stationery, etc., for the eight months are represented by the very modest sum of £374 1s. 10s. The total liability of the bank to its customers in the shape of credit balances was £1859 4s. 8d, while the notes in circulation were about equal to the bills under discount, which formed the principal asset against them. The first account with the bank and, therefore, the first bank account opened in Australia was with a private in the 46th Regiment. This was on the opening day, and within a week thereafter another important transaction took place, namely, the execution by a borrower of the first deed of mortgage. The sum lent was £25, and the rate of interest, probably in view of the exceptional security, was ten per cent., a very moderate rate for those days. The one ledger was made to do duty for what are now considered a variety of purposes. It included current accounts, discounts, interest, profit and loss, aggregate balances, and even the balance-sheet as signed by the directors and officers. But this ledger—unimportant as it may have seemed in those days—is now one of the most interesting relics of early life in Australia. In it are inscribed names which still live, and will always live in the history of the colony and the hearts of the people. There are names also of business firms which appear in the bank's books of to-day, a fact of which any bank may be proud; and there is an officer in the service of the bank whose grandfather was a member of the first staff, and drew a portion of that modest sum set down in the first balance-sheet under salaries. The signatures at the foot of the balance-sheet are those of Mr. J. J. Campbell (President), Messrs W. Darcey Wentworth, Thomas Wilde, William Redfern and Robert Jenkins (Directors), Mr. R. Campbell (Accountant), and Mr. E. S. Hall (Cashier). The compilers have been able to secure a picture of Mr. Edward Smith Hall from his son-in-law, Mr. F. C. Fulton, of Napier, and have pleasure in reproducing it here. Mr. Hall was born in 1786, and arrived in New South Wales in 1811, a year after his marriage. Six years later when the Bank of New South Wales was established, Mr. Hall received an appointment as cashier. He died in 1860, honoured and respected by all, and his portrait has a prominent place in the Sydney Town Hall. The inscription at the family Mausoleum, Bondi, Sydney, says that in 1826 he established the Sydney Monitor and was in after years known as the “father of the free press of Australia.” To his writings and exertions as a member of the Patriotic Association the Parent Colony is said to be indebted for the hastening of its constitutional government and trial by jury. As an author, Mr. Hall's latest effort was a work on political economy, addressed to the young men of Australia. When in Edinburgh in 1873, Mr. Fulton saw a ten shilling note of the Bank of New South Wales, issued in 1817, and at once recognized thereon the signature of his late father-in-law. With so small a capital and the expenses of the Bank only slightly exceeding £500 per annum, very small earnings were sufficient from which to pay good dividends. As the business increased the capital was added to from time to time, until in 1825 it exceeded £10,000. The following is the last balance sheet of the dollar period.
Balance-Sheet of the Bank of New South Wales, 31st of December, 1825.
Capital paid up $43,200.00
Notes in circulation 115,940.00
Deposits 297,158.98
Dividends Unclaimed 686.00
Profit and Loss, 1/2 yr. 11,195.21
Total $468,180.19
Dollars in Chest $127,479.50
Govt. Store Receipts 27,691.24
Bills 291,208.28
Mortgages 20,295,67
Furniture 1,505.50
Total $468,180.19
page 498
A month or two after the issue of this balance-sheet the dollar currency was abolished by an Act of the Executive Council, which had been formed a year or two before to confer with Governor Brisbane on colonial matters. A few years later the Council was enlarged to the number of fifteen members, and called the Legislative Council, but even then the Governor could alter any or all of the decisions of his Council if he chose. It was not until 1813 that New South Wales was blessed with a form of representative Government, and even then twelve of the thirty-six members were nominated by the Governor. The manner in which the colony had been founded and settled was, of course, such as must retard its progress. Trade was, however, springing up, and banking business was developing as a consequence of the immigration of free subjects, which was at last being greatly encouraged. When the dollar currency was abolished, the capital of the Bank was doubled, and some six years later, in 1833, it was increased to £40,000. Three years later the paid up capital stood at £100,000, and at that it remained for eleven years, during which time the business of the Bank expanded with fair rapidity. In 1848, which was evidently a profitable year, a transfer was made from profits to the capital account of upwards of £20,000. In 1851 the discoveries of gold turned the eyes of the world toward Australia, and the Bank of New South Wales was not slow to take advantage of the good times that naturally followed. Of the sixty-one half-yearly dividends paid up to July, 1849, six only had been under ten per cent.; twenty-five had been from ten to fifteen per cent.; sixteen from fifteen to twenty per cent., ten from twenty to twenty-five per cent.; on two occasions £33 6s. 8. per cent, had been paid; once £41 13s. 4d. per cent., and one dividend ran as high as £51 7s. 9d. per cent. The paid-up capital in 1851 stood at about £130,000, but for the three following years only ten per cent, dividends were paid, and the balances of profits, which amounted to more than a quarter of a million, were added to the paid-up capital. In 1856 twenty per cent, dividends were resumed and continued till 1860, when it dropped to fifteen per cent., in consequence of the increase of capital, which in that year jumped from £500,000 to £750,000. Before the end of 1860 the reserve fund had accumulated to £205,373. In 1880 it stood at £490,000, in 1887 it was £910,000, and in 1895 it was £1,172,297 2s. The note circulation for the past forty years has averaged about £600,000, but stood at £733,978 in October, 1895. The deposits have gone steadily upwards from £382,561 in 1851, to £15,019,773 in 1887, and £17,343,588 4s. 3d. in 1895. For twenty years prior to 1893 an unvarying dividend of seventeen-and-a-half per cent, was paid, but since then the Australian crisis, which was quite unable in the least to affect the stability of the Bank, has caused a temporary falling off in the profits of the proprietors, the last dividend being at the rate of nine per cent, on a paid-up capital of £1,894,200, the authorized capital being £3,000,000. In the British Australasian for the 10th of October, 1888, there appeared an exhaustive article dealing with the past and then present of the Bank of New South Wales. After giving a vast amount of particularized information the writer goes on to say:—“The Bank has grown until it touches every part of Australasia except Tasmania, and in addition to the eighty-seven branches in New South Wales, there are now thirty-one in New Zealand, thirty in Queensland, twenty-nine in Victoria, two in South Australia, two in Western Australia and one in London. In all, therefore, including the head offices, there are 183 establishments carried on by the Bank of New South Wales, and the balance-sheet is the only one in Australasia, or in any other colony for that matter, of which the assets exceed £20,000,000. Of course the largest business is transacted in New South Wales, where the Bank receives deposits from the general public to the amount of considerably over £7,000,000. In Victoria the deposits are about £2,750,000, in Queensland they exceed £1,500,000, in New Zealand they approach £1,250,000, and with South and Western Australia they have a total account of about £13,250,000, which would point to about £1,250,000 being drawn from London sources. Fifteen millions is a vast sum of money with which to be entrusted by the public, and a comparatively small proportion of the total is Government money…. In conclusion we cannot refrain from pointing out that it has been marvellous that throughout a long career of seventy years this pioneer Bank in[gap — reason: illegible]its original and present form has never missed making a substantial return to its shareholders in any year. Profits will rise and profits will fall as times are good or bad; but profits there always have been, and at times they have been well nigh unparalleled in the history of banking.” Since this appeared in the
Mr. Donald Larnach.

Mr. Donald Larnach.

British Australasian the figures quoted by it have been largely increased. The deposits on the 30th of September, 1895, were:—New South Wales, £9,750,000; Victoria, £2,750,000; New Zealand, £2,000,000; Queensland, £1,800,000; South Australia, £560,000 and in Western Australia £180,000, making a total for six colonies of £17,040,000. The Australian Insurance and Banking Record and other leading financial journals also speak most highly of this grand colonial institution. In 1851 the status of the Bank was further improved by its incorporation under an Act of Parliament. In the following year the Melbourne Board was established, and a year later still the London Branch was opened and a board of directors instituted there. “Looking back to the directorate of 1851,” says the British Australasian, “we find the names of two gentlemen who were identified with the Bank in Sydney upon the London Board now—Mr. Donald Larnach and Sir Daniel Cooper. Both were page 499 directors of the old Bank before its incorporation in 1851, and to Mr. Larnach rightly belongs the title of Doyen of Australasian banking. He was a director of the Bank of New South Wales considerably more than forty years ago, and has seen the institution, always prospering, grow into the stalwart giant it has now become. It must indeed be a matter of congratulation to him that he has been so intimately connected with that development. He it was who was entrusted with the establishment of the London Branch in 1853, and he has ever since been connected with it.” The present London Board is composed of the following gentlemen:—Mr. D. Larnach (chairman), Sir Daniel Cooper, Bart., Mr. R. Lucas Tooth, and Mr. Henry P. Powell, and Mr. David George is manager of the London Branch. The picture of Mr. Larnach given herewith is from a photograph recently taken in London and used by permission of Mr. Rhind, the head officer for New Zealand. The Melbourne Board
Mr. J. Russell French.

Mr. J. Russell French.

consists of two gentlemen, the Hon. David Moore and Mr. William Taylor, and Mr. Roderick Murchison is the Melbourne manager. The general manager, Mr. J. Russell French, whose picture is given herewith, has been connected with the bank since 1863, when he joined the head office staff as a junior. In 1869 he came to the Colony as accountant at Christchurch, and worked his way up to the position of assistant Inspector for New Zealand, which he held for several years prior to 1887, when he returned to Sydney as assistant Inspector for New South Wales. Subsequently he became Chief Inspector, and, a vacancy occurring in the office of General Manager, Mr French was appointed thereto. In New Zealand the business of the Bank of New South Wales is still extending. In Wellington it numbers amongst its customers many of the wealthiest firms and companies in the city, and in some of the towns of the province it does a large business. The Bank of New South Wales is most decidedly popular, and naturally so, for there is no scarcity of funds for safe business, and there is a disposition on the part of those in control of its affairs, in this Colony at any rate, to assist legitimate enterprise. In short the success of the Bank—its assets are now within a fraction of twenty-five millions—shows that it has been conducted on business principles, and it is a satisfactory feature that there is no evidence of any tendency to forsake those principles by which its undoubtedly leading position has been secured. The Wellington Branch was opened in 1861 in premises in Manners Street. Several years later a removal was made to Willis Street, where a good building was erected; but as the centre of the town became more permanently settled, this was found to be too far away, and the opportunity was taken of securing the present fine building in Lambton Quay, one of the very choicest sites in the city, as may be inferred from the fact that shortly before the Bank removed there it sold for the very large sum of £140 per foot of frontage. For many years prior to its sale the building had done duty as the Supreme Court. It is commodious and handsome. The grass plot in front with a rata tree on either side of the main entrance, being unique in the business part of the city, serves the double purpose of pleasing the eye of the passer-by and of marking a readily-perceived distinction between the premises of the Bank of New South Wales and those of any other bank. Another important feature is that the Bank of New South Wales is the only bank situated on what is recognised as being the best side of Lambton Quay. Until the closing of the Colonial Bank this distinction did not, of course, exist, as the two buildings are immediately adjacent. The inspector's office occupies one wing of the building, and has been recently fitted up conveniently and elegantly. The New Zealand branches of the Bank of New South Wales and the names of the various managers are as follows:—Wellington, Mr. B. M. Molineaux; Auckland, Mr. William McCullough; Christchurch, Mr, W. S. Robison; Dunedin, Mr. W. R. Perston; Amberley, Mr. E. Kempthorne; Ashburton, Mr. R. S. McFarland; Blenheim, Mr. R. W. Jenkins; Bulls, Mr. E. Herbert; Danevirke, Mr. A. Paul; Geraldine, Mr. A. E. Hawkins; Gisborne, Mr. E. Parke; Greymouth, Mr. D. Campbell; Hastings, Mr. W. H. L. Galwey; Hawera; Mr. H. P. H. Graves; Hokitika, Mr T. O. W. Croft; Invercargill, Mr. A. Christophers; Lawrence, Mr. E. M. Wakefield; Masterton, Mr. C. A. Tabuteau; Napier, Mr. W. E. Frazer; Naseby, Mr. J. Lundon; Nelson, Mr. J. A. Preshaw; New Plymouth, Mr. N. K. MacDiarmid; Oamaru, Mr. W. Grumitt; Ophir, Mr. J. L. Flint; Patea, Mr. J. Munro; St. Bathans, Mr. A. H. Vernon-King; Thames, Mr. R. Smith; Timaru, Mr. R. C. Tennent; Wanganui, Mr. A. Stedman; Westport, Mr. W. Pringle. That the Bank of New South Wales will continue on its prosperous career is undoubted. It is a more distinctly intercolonial institution than any of the other banks. The leading position which in life insurance is so surely held by the Australian Mutual Provident Society may in banking be safely ascribed to the Bank of New South Wales.