"With Faith And Courage"
The Bank of Adelaide 1865 - 1965
(Written by the Late Ron A. Potter)
Chapter 4 : The Best All-Round Banker"
The Directors did not need to look far for a new Manager. Mr R G Wilkinson, Manager of the National Bank of Australasia in Adelaide since 1870 who had recently returned from a trip to England was an obvious choice. With 36 Branches in South Australia, the National's business in the colony was almost as large as in Victoria and probably more soundly based. Wilkinson, an original but very temporary shareholder in The Bank of Adelaide, was recognised as "the best all round banker" in the State and a good salary was needed to attract so able a man. Negotiations between the Board and Wilkinson were completed in February, 1880. A salary of £2500- a year, £1,000- more than Souttar enjoyed, together with the prestige and opportunity offered by the position of principal executive officer was sufficient inducement to make up for the smaller business of the younger bank. He remained with the National long enough to complete the March balance and entered upon his new duties in the middle of April.
With the resignation of Souttar and the appointment of Wilkinson the role of the Board became more determinate. Accounts which had been allowed to drift at the discretion of the Manager were brought into line, arrangements for repayment put on a definite basis, security demanded and the whole business more strictly supervised. Richard Wilkinson was a new broom, determined to sweep away all signs of inefficiency and mis-management from his new charge. Like all new brooms he must have aroused some hostility and resistance amongst the staff. W J Oldham resigned in June 1880, and Henry Stodart three months later. The loss of two such capable officers, who had joined the Bank at its formation was a matter of regret. Both may well have felt some claims to the post of Manager and when it was filled from outside, went into business as public accountants, in which profession they achieved considerable success. Mindful of their services both Henry Stodart and William Oldham were successively appointed auditors to the Bank. At least ten other officers, a considerable proportion of the Bank's limited staff in those days, and the messenger, either resigned or were dismissed within the two years following Souttar's resignation.
Pictured left R.G. Wilkinson : Manager from 1880 to 1890. Branches increased to 27.
Those
who remained had little cause to welcome the changed state of affairs. William
Garsed
who had been Manager at Kapunda was to have his staff reduced to himself and a boy and his
salary brought down by £50- to £300 a year. His branch was steadily losing money and
expenses had to be curtailed. Burkitt at Gawler was offered the same conditions and resigned.
The Board however allowed him to reconsider and he withdrew his resignation. He was later to be employed on inspectorial duties until his death in 1907. Close watch was kept on all Managers' expenses and if they used more fuel or light at their premises than they might have done if they had had to pay for it from their own pockets, they were quickly called upon to economise. New staff when engaged as junior clerks were required to serve for three months with no salary and afterwards received £30- a year.
Times were undoubtedly hard in South Australia in the hungry eighties and Wilkinson's remedy for the evils of the times was lower wages. He complained to Wilson of the Commercial Banking of Sydney in early 1886 "I can see no prospects for South Australia until we are able to get our wages down to 4/- a day. Nothing is paying with the markets of the world as they are, and, unless the labouring population is employed, the whole body of the colony must starve". Even the discovery of gold in Western Australia did not arouse much enthusiasm. "Nes from WA" he wrote later in the year to Wilson "points to a valuable discovery of gold there and I understand the finds are extensive, so that our surplus population may be drawn off there and relieve our over-crowded markets. That will not revive our trade locally. The staff were not alone in feeling the effects of the new regime. To Dr Charles Gosse, an eminent Adelaide physician, Wilkinson wrote "I would here point out that in cases like your own I invariably ask to have security or a guarantee and it is not considered businesslike of a Manager to part with his money otherwise. The treatment of my predecessor will hardly have prepared you for such action on my part, but I feel it to be somewhat invidious to ask my Board to single you out as an exception and shall be much pleased if you can meet me".
While the new broom was at work cleaning up the untidy business that John Souttar had left behind, the builders were busily putting the finishing touches to the new Head Office building at the South Western corner of King William and Currie Streets. From the very first it had been clear that the Gresham Chambers premises were, at the best, only suitable for temporary occupation, and as early as March 1867 the first selection of a permanent site is recorded in a Board Minute, when Mr Waterhouse reported "the purchase from the Estate of Beeby and Dunstan of a piece of land in Grenfell Street being the western portion of Acre 107 having a frontage of 75 feet". The purchase price of this land, now partly occupied by the Grenfell Street Post Office, was £4,500-. It was later disposed of and in December, 1873 the Bank accepted an offer of an 87 foot frontage to King William Street from Mr Trimmer, then occupied by Messrs. Way, Parker and Brown. The purchase terms provided for the payment of £7,500- on the death of Mr and Mrs Trimmer or at the expiration of twenty years, subject to an Annual Rental of £600- until the principal was paid off.
This Trimmer block represents the greater portion of the land on which the National Mutual Life Association of Australasia Ltd. was later to have its Adelaide Office and which the Bank was to reacquire in 1961 to provide for future expansion. It formed part of Town Acres 140 originally granted to Thomas Dyke, a holder of a preliminary land order entitling him to purchase a town acre for 12/-, the priority of choice amongst order holders being determined by lot. The land on which the Bank was to erect its Head Office also formed part of Town Acres 140 adjoining that acquired from Trimmer, and was at the time held by William Elder under a 90 year lease originally granted by Edmund Trimmer to George Morphett in 1849.
The Bank was able to buy from Elders this corner block of land, measuring approximately 70 feet to King William Street and 90 feet to Currie Street, for £10,000- and to sell the land it had earlier obtained from Trimmer to Mr Samuel Way, the Chief Justice. The Western boundary in Currie Street abutted Alfred Chambers named after Prince Alfred, Duke of Edinburgh, whose visit to Adelaide in 1867 had been a brilliant occasion in the life of the young colony, and one in which John Souttar as the Governor's son-in-law must have figured quite prominently. Alfred Chambers, the property of Joshua Gurr, storekeeper and corn factor of Saddleworth, was later to be aquired and demolished to make way for the extensions to the Bank completed in 1940. Once the complicated transactions were completed and the Bank had obtained a freehold title to its site, the stage was set to demolish the meagre buildings facing King William Street and the somewhat more substantial structure occupied by Sherrings printers at the Currie Street corner with its three iron verandah posts to which citizens hitched their horses. The design of the new premises was thrown open to public competition, a common practice last century, and a brochure issued giving full details and conditions. Entrants, who had to submit their plans by the 1st February, 1878, were required to provide accommodation in the basement for two strong rooms for coin, books, and securities, a voucher room, stationery room, and a clerks' cloak room, lavatory etc. On the ground the requirements called for a public office and clerks' room with the principal entrance from King William Street, a board room, a waiting room to accommodate also two or more clerks, and a lift from the basement. The first floor was to be the Manager's residence, to be entered from Currie Street and was to comprise a drawing room, dining room, morning room, and library, together with three bedrooms, two servants' bedrooms, kitchen, scullery, larder, bathroom, linen closets, etc.
The successful design was to be awarded a premium of £150- and the second £75-. For any other designs accepted by the Bank a premium of £50- was to be paid. The successful architect would have the amount of the premium deducted from his commission. It was suggested that "The facades should be boldly treated to be carried out in freestone and not dependent for effect on the elaboration of details". Clearly the Directors did not want to emulate the classic fantasy of the Head Office of the bank of South Australia which still graces 59 King William Street.
There was little surprise when from the twenty seven plans submitted that of E W Wright, a former Mayor of Adelaide and architect both of the Town Hall and General Post Office, was chosen. Messrs. Rowland Rees and I A Hornabrook were awarded the second premium of £75-, while the designs of W McMinn were purchased for £50-. E W Wright's building, erected by Brown and Thompson for a contract price of £24,000- has changed externally with the incorporation of Alfred Chambers in 1940. This in effect doubled its size by the addition of five extra bays along Currie Street and altered its proportions, without detracting from its original classic simplicity. The King William Street facade remains virtually unaltered, except for the widening of the main entrance doors and the removal of the iron railings below the ground floor windows. The complete refacing of the building in 1940 has robbed the exterior of the variety of texture which earlier highlighted its main architectural features. The graceful external spiral staircase from the roof to the ground at the South Western corner of the building was another victim of progress. Although today it would be a complete anachronism, it is a pity that this fine example of Adelaide's craftsmanship and design in iron could not have been preserved.
By the beginning of October, 1880 the Bank was conducting business from the new premises, but the elaborate suite of rooms designed for the domestic occupation of the Manager and his family were never to be used for this purpose as Mr Wilkinson preferred to continue to live at Lower Mitcham. Wilkinson's decade as Manager was to be as difficult as any that the Bank and the State was to face. It began with three disastrous seasons which spelled ruin to most of the farmers who had pressed for the Strangways Act and the other Waste Lands Amendments Acts in the seventies to unlock the pastoral leases beyond Goyder's Line for credit selection by farmers, who were to pay a deposit of 10 per cent of the purchase price and balance over a period of six years. The migration of farmers from their small worked-out acreages in the South to the new lands of the Broughton, the Oladdie plains, and the Willochra was an agricultural revolution that set a completely new pattern for the development of the State. It transformed pastoral land into specialised grain regions growing wheat for export. The railway was pushed further and further into the interior and linked the farming areas with their outports at Port Pirie, which suddenly found itself one of the great grain harbours of the world, Port Augusta and Wallaroo.
There were some who had misgivings as to the wisdom of the new land policy. Goyder was unshaken in his conviction that the marginal lands were unsuitable for farming and the pastoralists were dismayed at this rape of the north which enabled the "peacock" to pick the eyes out of the pastoral land and leave runs without access to water or reliable feed. The older generation decried the scratching up of vast acres of miserable stony scrub with a stump jump plough or mullenizing with a spiked log. They remembered the deep tillage of small fields and the high yields of the farms they had known in England and advocated a balanced agriculture based on a diversity of products. The production of a single crop at as low a cost as possible was not farming in their eyes, but the others, closely watching developments in California and elsewhere, saw an insatiable demand throughout the world for the cheap wheat that they would grow in competition with any place under the sun. "Every day" wrote the editor of the 'Northern Argus' at Clare "brings with it additional proof that South Australia is destined to become one of the finest agricultural colonies in the World".
Public opinion as a whole scoffed at the doubters. "The rain follows the plough" became virtually an article of faith and with the first returns of five bushels an acre at the Government's experimental farm at Mannahill, one hundred miles north east of Terowie, it seemed that the land which could grow wheat was limitless. New towns sprang up throughout the north, their plans almost a rubber stamp reproduction of Light's master plan for Adelaide itself. The Government coffers swelled with the proceeds of the sales of selected farms and town lots. Two hundred miles north of Port Augusta the railway, which it was hoped would link the north and the south of the continent, had by 1882 reached Farina, a name indicative of high hopes. By 1882 bitter experience had proved the limits of profitable wheat cultivation in South Australia. The Adelaide correspondent of the Australian Insurance and Banking Record in his monthly letter for July of that year wrote of his recent trip throughout the north. "It would be madness for anyone to attempt wheat growing within one hundred miles of the misnamed township of Farina. Not only is the land a poor stony desert, scarcely fit to carry sheep to five acres of it, but the rainfall is uncertain; the only thing to be calculated on with anything like certainty in connection with farming in that part of the country would be the inevitable ruin of the farmer who was mad enough to attempt it".
During this period of violent change in the whole rural character of the State the Directors of The Bank of Adelaide made no move towards expanding the ambit of their business. The only new branch to be opened was at Noarlunga, a small farming township a few miles from its port at the mouth of the Onkaparinga River. Good profits could be made from city business and reserves were being put aside each year towards the aim of equalling half the paid up capital. Bills discounted and advances from 1876 to 1881 were falling and liquidity increased, with deposits remaining virtually stationary. Shareholders were receiving a steady annual dividend of 10 per cent and there seemed no reason to undertake risky growth.
The other banks in South Australia followed the northward expansion. Wilkinson's old bank, the National, boasted fifty one branches and agencies, the Bank of South Australia twenty eight branches with country managers in charge of up to four offices. The English Scottish and Australian Chartered Bank was represented at sixteen points. The Bank of Australasia with nine branches equalled The Bank of Adelaide in number. Only the Union Bank of Australia Ltd., with two, had less. With under 8 per cent of branches, however, it held 12 per cent of deposits and had made 14 per cent of total advances in the colony. By the end of the difficult decade its share of advances had fallen to 12 per cent. A new local competitor came on the scene in 1881 with the formation of the Town and Country Bank having its head office in the Town Hall and a branch in Rundle Street. As in the case of the Commercial Bank of South Australia it was sponsored by a group of distinguished promotors and its shares were eagerly sought after. Both the new local banks sought rapid expansion by opening branches where ever new districts and towns were coming into being.
By 1885 the Town and Country Bank, incorporated under an Act of Parliament based on the pattern of the Commercial Bank of South Australia Act, had opened no less than fifteen branches in South Australia, including Farina and Maree in the North, and Wolseley in the South East. In the Northern Territory it was represented at Palmerston and Burrundie, in New South Wales at Silverton and Broken Hill, while its London Office of 18 King William Street, boasted a Board of Directors headed by Sir William Wedderburn Arbuthnot, Bart. Its rival the Commercial Bank of South Australia also had a London Office, at 24 Lombard Street, where H H Turton, John Souttar's brother-in-law and formerly principal executive officer of the Savings Bank of South Australia, was a director. In New South Wales it had branches at Purnamoota and Silverton, and it competed with the Town and Country Bank for business at Palmerston in the Northern Territory. It also had offices in Melbourne and Perth.
These two new local rivals of The Bank of Adelaide set out with a fine flourish to build up an extensive and profitable business and although their early success must have caused some concern to the Board of the older Bank, nevertheless, there is nothing either in the Board Minute Book or in Wilkinson's letters to show that this was the case. The Commercial Bank of South Australia had to survive a shaky start when it was heavily involved in the insolvency of Samuel de Young through advances made by the Manager, H D O'Halloran, which according to the Board had not been brought to its notice. O'Halloren was dismissed, in spite of his vehement denials of the allegations of the directors, and later secured appointment as auditor of the Town and Country Bank, which seems to indicate that his protestations were not unconvincing. The early eighties were a difficult time for Adelaide bankers. Drought had brought land values in the rural areas toppling down as selectors surrendered their farms and then rebought them for a fraction of the contracted price at subsequent auctions where, by tacit agreement, no rival bidder to the original holder appeared. Low prices for wheat and copper, and poor wool clips meant less money for the rural producer to spend, and city merchants were in turn hard pressed to meet their commitments. Out of work labourers received no wages and the shopkeepers suffered.
In spite of the obviously hard times which led to a spate of insolvencies the general feeling of the community was one of optimism in the future of the colony and of conviction that any depression was caused by temporary factors that would soon be overcome with the return of good seasons and with the discovery of a major gold field. Speculation in mining was rife and land syndicates boomed. Fortunes, it seemed, could be made by those who were prepared to put up the money without stirring beyond Adelaide terraces, "Far too much mining is done on the corner" of King William and Pirie Streets where the brokers had their offices, a contemporary reported, and certainly far too much speculation took place in town blocks in places which remained no more than an ambitious plan of the surveyor's map. The general feeling of confidence led to competition amongst the banks as a whole to secure in advance the best avenues for prospective business. New rivals from over the border were announced. The City of Melbourne Bank in 1882 purchased land in King William Street for an Adelaide Office which never came into existence, while a year later the Bank of New Zealand announced its intention to open a branch in Adelaide. In 1894 the newspapers carried news of another local bank which would pay interest on current accounts but would not discount bills or issue notes. The publication of this information was premature for no such bank was ever formed. The Federal Bank of Australasia however did lease premises adjoining the Advertiser building in King William Street and the Commercial Bank of Australia Limited acquired a suite in the National Mutual Building in Victoria Square.
In the forward march of the banks, the Adelaide appears to have marked time, while Wilkinson consolidated the business he had taken over. Conceived as a city bank its main interests were concentrated on the capital although it had advances on farms and stations throughout the State, some of which were to prove a headache to the management for many years. Saltia Station east of Port Augusta was left on the Bank's hands for many years and much of Wilkinson's correspondence must have been taken up with supervising the management of this pastoral property. With typical caution he wrote in 1885 to the Port Augusta Manager, Terrell, who was quietly investigating the property, "I am told the place is fairly valuable but would rather believe the contrary if such information is reliable" and quoted five shillings to a pound an acre. Mr John Lillywhite was placed in charge of the property but drought and flood, rabbits and wild dogs prevented any real return and with a better season in 1889 Wilkinson was all for selling "the first chance we have of a good offer - It will", he wrote, "take one good season for people to recover, a second to get their courage and after that we may have some discouragement again so that about 18 months to 2 years is the time to part". The station was finally sold to Andrew Tennant in 1891 and as a final disappointment the sheep mustered 1000 short.
Richard Wilkinson's letters prove his all round ability as a banker. There was no aspect of the business in which he did not exercise a strong control, while his correspondence with Lillywhite at Saltia shows that his managerial role extended far beyond the ordinary run of a banker's duties. He supervised his branches closely and in detail, spelling out to the managers how to run their businesses. A letter to the Port Augusta manager in 1884 gives an insight into his approach to banking problems and is in itself a wise assessment of the business climate at a time when the colony was emerging from the depressing influence of three years of drought. Advising Terrell on advances he wrote "To rely on a promise is insufficient. Some trades are dangerous - An auctioneer has but his pulpit to hammer. A publican as a rule nowadays, has nothing - everything being mortgaged. A butcher has generally only his book debts. This does represent value. Some men pass but very small sums through the Bank and their promise is therefore somewhat unreliable. All these matters want probing and if you have a doubt whether a man ought to be trusted better not trust him. In such a case refuse him in the best manner possible either by stating the Bank requires a security for its advances or the Board objects to such advance without security. While on this point I bring under your notice that titles to small properties are almost valueless for without a mortgage the Bank can hardly get a Title to sell by if the man should clear. One should always see a margin".
In 1882 Wilkinson set out to overtake his rivals. Naturally an aggressive banker, he sought to build up a network of branches throughout the State. In that year metropolitan branches were opened at Hindmarsh and Norwood. At Mannum, which was an important river port, and at Stirling in the Adelaide Hills, branches of The Bank of Adelaide were started. In the subsequent year Gumeracha in the Hills, and Mallala, centre of an important wheat growing area in the Adel;aide plains, were added. The year 1884 saw a good season and the Bank opened at Aldinga, wheat port of the Willunga and McLaren Vale district, Cradock and Hammond, in the marginal lands of the Willochra plains, Curramulka, strategically placed in the centre of the lower Yorke Peninsula, and Crafers, just over the brow of Adelaide's circling hills. In the following year a branch was started at Booleroo Centre some thirty miles south of Hammond.
The placement of Branches called for judgement because in most established towns and districts other banks were already in occupation and little or no worthwhile business could be obtained by a newcomer. The railway was to determine progress of the towns along its track and as the maximum distance that wheat could be reasonably carted in a day was about 7½ miles, centres of population tended to spring up some fifteen miles apart. Each town as it grew could support one or possibly two banks, and the branches founded by Wilkinson and his successor, John Shiels, form a pattern, largely dictated by the gaps in the overall banking network and by the transport needs of a horsedrawn age.
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Pictured at left John Shiels Manager from 1890 to 1920.
Number of Branch increased to 54 during this period.
Even today, although the motor car and first class country roads have made distance from the
railway a matter of minor importance, the small country town continues to be a focal centre of its district. There have been, of course, considerable changes in the character of its occupations. Service stations have replaced blacksmiths, small flour mills have gone and with them the agricultural implement factories. Local breweries have vanished and few independent cordial manufacturers remain. Nevertheless, there remains an important commercial, cultural and social life in South Australia's country towns which gives them continued vitality.
In the eighties most of the customers of a country branch were farmers. At Mannum where the Bank had 95 customers in 1884, with credit balances of £2150- and overdrafts of £519-, there were 52 farmers on its books, 3 labourers, 1 butcher, who was also trustee for the Presbyterian Church Building Fund, 3 blacksmiths, 2 publicans, a wheelwright, carpenter, mason, carrier, baker and hawker, tinsmith, sadler, painter, auctioneer and clerk, surveyor's assistant, police trooper and a firm of machinists, I & D Shearer, who today, as David Shearer Ltd., are important manufacturers of agricultural equipment and an exceptional survivor amongst the scores which have disappeared with the growth of larger scale industry in Adelaide itself.
"Business", reported the Manager, echoing his colleagues at other points, "has been extremely dull with everybody notwithstanding the good harvest we had. This is no doubt due to the low price of wheat which is the only product of the District and farmers have had to sell their wheat to be able to square off their accounts. Those who are able still hold in prospect of a rise in the market later in the year".
Many towns which today are important centres did not exist in the eighties. In the same report the Mannum Manager informed Head Office that "the Murray Bridge township has been surveyed and part sold, allotments going very low. Business I hear is improving there and I should think in a month or two it may be worthwhile trying a Branch or Agency there if the Town and Country Bank do not open there before that time".
Cradock, which today is little more than a name, reported in March 1884, after its first eight months as a branch was "well situated as regards business being surrounded by an immense agricultural district on all sides and on the direct track from the Barrier Ranges to the nearest S A railway station. The great drawback to the township is it being in the centre of a block of land containing 15,000 acres belonging to the University, a large portion of which is lying idle as the farmers do not care for renting and improving land which they cannot make their own especially when they can obtain land in their own names from the Government at far more advantages terms". Referring to the harvest, Mr Burton, the Manager wrote, "this is the first return they have had for 5 years. I think it shows a very healthy state of affairs for the farmers to have been able to clear themselves and buy their surrendered selections and at the same time to hold part of their wheat", being, "very averse to sell at present prices more than is absolutely necessary. The average for the past season I should say was about 6 bushels which will pay very well as the soil is very loose and light and can be worked with very little labour or expenses".
The steady expansion of the Bank in the first five years of Wilkinson's regime was not without some setbacks. In London the Oriental Bank Corporation, John Souttar's old bank, which acted as agent for the Adelaide failed in May, 1884. Its branches were to be found not only in Australia but throughout the Far East, India, Ceylon and Mauritius, and its fall was attributed to this extensive spread of business. Fortunately the Adelaide at this time was in debit with the Oriental and sustained no loss. The failure involved appointing fresh agents in London and Wilkinson arranged with his Sydney agents the Commercial Banking Company of Sydney, to protect London requirements which would not exceed fifty thousand pounds. Prior to the stoppage he had discussed with Dibbs of the Commercial Banking Company of Sydney the question of transferring the London Agency to that bank and the failure merely precipitated action which was already contemplated.
Wilkinson, however, was constantly complaining of "oppressive" interest rates and threatening to seek other agents in London. The difficulties associated with keeping to the formal arrangements laid down for the conduct of the Agency made it clear that with the increasing volume of funds, particularly from the Government, and the sporadic nature of the business the time was fast approaching when a London Office would be imperative.
NEXT CHAPTER 5 : THE UNPRECENDENTEDLY SEVERE CRISIS"