"With Faith And Courage"
The Bank of Adelaide 1865 - 1965
(Written by the Late Ron A. Potter)
Chapter 7 : "A Victorian Gentleman"
For the next thirty years John Shiels was to hold the reins of the Bank in his capable hands. From the moment he took office till the day he died, still in harness, he identified himself with the fortunes and progress of the bank which he sought to advance faster than the inherent conservatism of his Boards would permit. Early in 1891 he wrote to Percy Arnold in London "I do not see how we are to make much headway if we depend on this Colony alone, the rate of progression is here too slow to enable us to make the best use of our London Office and our resources and I look forward to opening in the other Colonies as the only means of doing the most we can with our money and utilizing your services. We often talk the matter over at the Board but the members are very conservative and wish to avoid taking a step in the wrong direction. The move will come in time".
Looking ahead he besought Arnold to seek out a few reliable officers, Scottish for preferences as "our staff here at the Branches does not contain many men we could rely on out of their usual grooves". In July he was telling Wilkinson "We are no nearer Melbourne and/or Sydney - nor shall we ever be with our present Board - they will not trust anyone - no use to open Melbourne and expect to pull every small wire in Adelaide - we should never do business enough to pay expenses". Although it is easy to understand Shiel's impatience, the trend of business in Melbourne was sufficiently ominous to warrant the wait and see policy of the Board. Explaining the Victorian situation to Percy Arnold he referred to the Government deficit of £1,100,000- as being "not so bad as it looks at first sight. In that (my old) Colony extravagance at all points has been the rule for some years, they must retrench now and the Treasurer will be able to flourish his deficiency as an answer to applications for new Government works - the same reason will assist the Banks in putting the curb on. Business is very dull in Melbourne and there is much "washing up" to be done. In my opinion it is a good time to open there - we could select our risks better now". By early in 1892 the situation in Victoria had further deteriorated. "Things in Melbourne are very bad" he wrote to Wilkinson "although all the land buying Banks are now in liquidation the effects of their enormous purchases had not yet been gauged - prices have not therefore reached their lowest by a long way".
A year later Adelaide was beginning to feel the repercussions of depression in Victoria. "Times are very trying almost everyone has lost by mining - many have gone under - the spending power of the community is greatly curtailed and business generally is very stagnant. As a make weight we have benefited by the misfortunes of our neighbours, the stoppage of the South Australia and Federal and rumours about the Commercial have sent us many good accounts. - from this forward we shall feel the benefit of these accessions and London will perhaps get as much "cream" as we will. Our deposits with other banks are now almost nil and advances against Scrip ditto - we can't afford to run risks". Events fully justified the Board in curbing Shiel's urgent desire to expand in the other Colonies. The Bank of South Australia finding its South Australian business burdened by a dead weight of hard core advances put out feelers for an amalgamation with The Bank of Adelaide late in 1891. The Adelaide Board was not "'sweet' on the amalgamation" and insisted on the Head Office being in Adelaide, a change that was "the fatal bar. - it was hardly to be expected that well paid officers and directors could calmly see the wisdom of a step which might deprive them of their salaries and fees. Only dire necessity, which may not arise will drive them to accept our terms".
Dire necessity was to arise only too soon. In 1887 the Bank had opened a Melbourne Branch under the management of Mr Eager and the London directorate saw in Melbourne the opportunity to restore the waning fortunes of the Bank in South Australia. By 1889 Eager had lent £600,000- to dealers in land as against less than £160,000- in normal trade advances. Meldrum the Colonial Manager seeing the writing on the wall resigned. (He later sought and was refused a seat on the London Board of the Adelaide). English depositors took alarm and withdrew their money as it matured. Melbourne losses mounted, £340,000- was written off and when, after the overtures to The Bank of Adelaide were unsuccessful the Bank of South Australia went cap in hand to the Union Bank of Australia Ltd. a further £625,000- was considered to be doubtful of which under a third was likely to be recoverable. Only £65,000- of all Melbourne advances were described as "safe but not all desirable".
Shiels was unperturbed by the absorption of the Bank of South Australia by the Union Bank, regarding this as less unsettling than a stoppage and looking for "some good business out of the change". One immediate result was the securing of the London agency of the Western Australian Bank which remained a valuable source of business until that bank was taken over by the Bank of New South Wales in 1927. To make certain of getting the agency Shiels quoted better terms than the Bank of South Australia had previously offered. The fate of the State's oldest bank did much to vindicate the Board's policy of not seeking English or Scottish deposits. Both Wilkinson and Shiels had naturally expected to attract such deposits and Arnold had taken steps to secure them. These deposits however proved a source of weakness rather than strength to the Bank of South Australia as to many other Australian banks in the early nineties. English depositors although prepared to lend freely in good times were the first to withdraw their money at the signs of clouds on the financial horizon. In any event with 1893 fresh in their minds such deposits were no longer forthcoming.
With bank failure following upon bank failure, no one could be sure where the next blow might fall, and no bank was entirely free from suspicion. William Dick the Manager at Mannum was disturbed by rumours current in his district and John Shiels wrote to him "It is however not to be wondered at seeing that the public mind is in a state of nervous excitement surpassing any similar manifestation I have seen during thirty years banking experience. Some colour has been given to the rumours about this Bank by the retirement from our Board of Mr Henry Rymill - his reasons for his action are given in a letter to the "Register" - so far as the Bank is concerned there is absolutely no foundation for any statement reflecting on its stability. The accounts in any way doubtful are well provided for, and coin, debentures and liquid assets represent 9/- in the £ on the whole liability to the public - you are at liberty to inform your good customers of this.
At Left Mannum Branch in 1885
To Wilkinson in London he explained that "as we have kept very strong in coin our profit does not look so well - still we can pay the usual 7% dividend and put £3,000 to reserve and £3 or £4,000- to appropriation for losses". As the Bank had written off £23,000- for the "blundering idiot" Hooker's account the strength of the bank was beyond question. To add to the anxiety caused by the growing banking crisis forged Bank of Adelaide notes began to appear. Three hundred were presented and paid requiring the introduction of a new issue. Altogether the forgery business cost £1,000- "between notes paid, alterations and the new issue". It was small wonder that Shiels could write "I do not regard a neat appearance so much as elements of safety from forgery so if the design possesses the latter it will suit us". The new notes, third and last type to be issued, were in fact more attractive than those of earlier designs, and being coloured could not be forged by photo-lithography. By May 1893 Shiels felt "the worst is over and I think all the banks now open will stand up - certainly there are not many of them left". He was glad Wilkinson had unearthed him at Ballarat. Had he stayed there his "lot would now be like the policeman's "not a happy one".
In the following year the moment of expansion was resumed after a four year pause which saw only four new agencies at McLaren Vale, Dublin, Willowie and Mt.Torrens. Branches were opened at Caltowie, Quorn, and Angaston, the last-named fulfilling a Board decision of 1866. Agencies at Georgetown and Hamley Bridge helped to extend the Bank's representation which in 1895 was fortified by a Branch at Yorketown, where the National Bank had relinquished business in 1893, and at Woodside. Agencies followed at Truro, Crystral Brook, Willunga, Minlaton and Carrieton. Clearly it was intended to take advantage of the gaps left in the pattern of bank representation by the closing of other banks' branches during the depression of 1893.
Some of the activity in opening branches was a tactical redeployment of resources to seize the opportunities presenting themselves. Booleroo Centre was closed in 1890 followed by Maree and Aldinga two years later. Kingston closed in 1893, leaving the Bank without representation in the South East, and the Renmark Branch abandoned during the same year. A year later Curramulka, on Yorke Peninsula and Two Wells were closed. Gawler, Glenelg and Norwood were added to the list in 1895. At Gawler the Bank was involved with James Martin & Co., Engineers, and when the firm was broken up in 1907 it was being rumoured that the Bank's loss would approach £100,000-. In fact it amounted to less than £20,000- the business being sold as a going concern to Dutton, "the Squire of Analaby", who hoped to secure good railway contracts and thus maintain employment in Gawler. A few years later it finally closed down being unable to meet the "unfair competition" of the railway workshops at Islington. The assured safety of the Bank attracted depositors. It was the only bank in the State proclaimed under the Trustee Act for the receipt of trust funds. Deposits which just exceeded a million pounds in 1891 rose over two million five years later and the volume of notes in circulation also doubled. Advances increased much more slowly with insistence on maintaining a high degree of liquidity which in approximated 12/- in the pound of outside liabilities.
The expansion of the Bank, however, was not enough to satisfy the ambitions of all its officers. Gold was to be had for digging in Western Australia and Spencer Kelly threw up his hands at Quorn. Shiels was sorry to lose him as had always regarded him as one of his best men but saw that "any inducements should be of no weight against the Goldfields fever". Styles was also attracted by the West and John Shiels promised him a letter of recommendation to Mr. Holmes, General Manager of the Western Australian Bank. Relations with this Bank were most cordial and profitable. Holmes solicited the help of R. Scott Young, who was relieving Manager during the absence of Shiels in London in 1897, to find a Branch Inspector. The suggested salary of around £300- did not appear sufficiently attractive to Scott Young to induce a suitable man to apply for the post. Scott Young himself had been engaged as Accountant at Adelaide Office in 1893 at a salary of £450-, upon completion of his services in winding up the Commercial Bank of South Australia and he suggested around £500- as a reasonable offer. He told Holmes he believed C.F. Wreford of The Bank of Adelaide might apply for the position but that "in spite of admirable qualities - ability, good sense and steadiness he altogether lacked the experience for this job". Later Scott Young was asking for details of the charge for opening and keeping current accounts as the matter was under discussion in South Australia. On Shiel's return from London he recommended his Mannum Manager, R.L. Herbert for the vacant position feeling that opportunities for promotion to a post in keeping with the latter's experience and ability were unlikely to occur in South Australia.
Valuing greatly as he did the association with the Western Australian Bank Shiels was disturbed by whispers circulating in Adelaide in 1898 that heavy unsafe advances had been made all over the colony and wrote to Holmes to scotch the rumour. "If you have heard any talk you would know how to meet it, if not it is better you should have the hint and be on your guard. These things are very annoying, but most of us who have had long banking experiences have been subject to them at one time or another. It would be a good thing for you to increase your capital as your business is too large in relation to present capital and reserves. The public look at these figures more closely than they did prior to 1893",
When John Shiels visited London in 1897 he cemented the friendship with Percy Arnold which had grown out of seven years of correspondence. The business had already outgrown the Cornhill premises for in 1895 the Bank had moved into No. 11 Leadenhall Street, occupying part of the building - The Staff had increased to thirteen in number, including a Mr. Groocock, the "typewriter". The Bank's first typewritten letter is dated 24th July, 1896 and on its receipt from London, arrangements were made to purchase a similar machine for use in Adelaide. It was in this year that W.J. Masson, later to become General Manager, joined the London staff. By the end of the century deposits at London Office exceeded the half million, mostly through the South Australia Government and the Western Australian bank agency accounts. Advances and investments were approaching the million mark while the office's bill business exceeded the million. The rapid growth of bill work stemmed largely from Arnold's activities in appointing Agents throughout the world, for which he had given a free hand by Head Office in 1892. Previously the only agent outside the United Kingdom had been the Credit Lyonnais appointed in 1891 in the hope of attracting French wool business.
As memories of the '93 faded in English investors minds London became the major source of finance for the South Australian Government and Arnold, as London Manager, played an important role in the flotation of loans. From time to time Under Treasurers or Agents General felt that money could be saved by a direct approach being made to the market rather than by entrusting the handling of the loans to Nivison & Co. who specialised in such matters. The Bank of Adelaide attached considerable importance to the success of Government loans, so arranging their investments as to give each loan substantial support Arnold had a keen insight into the tone of the London market, acquired from daily contact with the discount houses and merchant bankers, and Arnold and Nivison together achieved a reputation for their handling of Government stock. The success of the relationship between the State Agent in London and the bank at times called for exercise of considerable diplomacy. Shiels writing to Arnold on the heading of State Agent indicated what was required. "Mr. Grainger" he wrote "is a man who is of good esteem and is not to be driven".
Shiels wrote to Arnold, saying it was impossible to send further reinforcements. "At present we are too bare to entertain the idea. The opening of new branches has drained our Head Office staff of many of its best men and I don't know how Mr. Young and his Sub. are to get through the approaching balance, I shall not be surprised to find them exhausted on the floor some morning after trying to work all night. Long hours, worry and anxiety are not peculiar to London only". To overcome the shortage of staff the Bank sought to "engage two or three young men with a few years banking training - such men are to be had particularly by advertising in Edinburgh and Glasgow. My experience (I hope not my national prejudice) tells me Scotchmen are the best".
Busy though London Office certainly was some of its tasks were of a nature not usually associated with banking. Mr. J.R. Baker, the Bank's Solicitor, requested the Manager to buy him a motor car in 1904. Shiels arranged for all types of purchases through London Office, Warwick chairs, glassware, a complete set of Besant's works, Irish poplin dresses in pale pink and cream for Mrs. Shiels, and seven paintings by Von Guerard, "a good artist and true to Australian Bush Nature", which were most disappointing when unpacked. Entertainment of distinguished and influential people who might bring both "profit and kudos" to the Bank was a constant duty for Arnold, which he loved, writing in great detail about the many social functions at which he represented the Bank. Both the Board and Shiels saw the need for such hospitality but were less happy about the publicity it sometimes incurred. "This is an advertising age but I think a little pleasure and attention can be given to our customers without our telling all the world about it" was Shiel's mild reproof after reading the account of a party on the occasion of the Lord Mayor's Show in 1903. Arnold was to meet Australians of every type including Alfred Deakin in 1907. "He is a fascinating man, talks well and fluently but his listeners have difficulty in finding the meaning of his beautiful phrases and language". Tom Price, the Premier of South Australia, "a lot better and more capable than a good many of his predecessors in the position he holds".
While Arnold was glorying in the glitter of London's financial world his chief was active in very different ways in Australia. In 1905 he was "on a tour in the Port Lincoln district sleeping in a tent and living chiefly on tinned meats" which he thought might "sound strange to a London banker as part of his Chief's duties". Out of this tour sprang branches at Tumby Bay, Cowell, Port Lincoln, and Streaky bay and four years later Bligh (Arno Bay), Ceduna, and Cleve. The advent of superphosphate and better farming methods had given an impetus to the West Coast which until the turn of the century was largely station country and thinly settled by pastoralists. Sadlier from Tumby Bay was the spearhead of the attack and was sent to spy out the lay of the land discreetly and report by telegraphic cipher to prevent any leakage at Port Lincoln. At Elliston alone was sadlier unenthusiastic about prospects as he moved around calling on the large number of customers the Bank already had on the "Coast". He found "the holdings large and in the hands of sheep men who mostly do their business with Elders and others in that line".
Establishing branches on Eyre Peninsula was no easy matter. Bank buildings had to be shipped from Port Adelaide by ketch and hauled by dray to the selected site. Heavy safes and furniture added to the load. The quarters were in most cases primitive and fit only for a bachelor. When Smeaton relieved Sadlier at Tumby Bay, Shiels was concerned that he had taken his wife and furniture with him because he knew that "the hotel there was not fit for a lady" and the Bank accommodation "uncomfortable". Sadlier however remained at Streaky Bay and Smeaton stayed on at Tumby Bay. Prior to his visit to Eyre Peninsula, John Shiels had been surveying the opportunites of the Mid-North taking care not to show his hand to any rival who might forestall him. Balaklava, Brinkworth, Blyth, Port Broughton and Georgetown were all opened in 1904 giving a strong network of branches in this sound agricultural district. The addition of Crystal Brook, Snowtown, Owen and Freeling completed the pattern by 1908.
John Shiels writing in 1906 could "see no sign of new industries - legislation in the labour interests tends to check them, the only outlet for capital now in favour is land, broad acres I mean, better farming and increased prices for sheep, lambs, and cattle are inducing farmers to pledge what they have to enable them to buy more".
With the consolidation of the Bank's position in the mid-North and the successful establishment of strong points on both Eyre and Yorke Peninsulas the direction of the campaign swung to the Murray Valley and the Mallee lands beyond the river. Its planning and execution called forth both strategy and tactics in which John Shiels excelled. He preferred if possible to make his own reconnaisance moving quietly around Kangaroo Island where the prospects did not greatly impress him. In 1906 he sought permission from the Board to make an extended tour of the Murray up to Renmark but he could not be spared from Adelaide and instead sent R.P. Scott from Mannum. In the early years of the century this was still an empty land with the river and the railway forming the lines of communication. Places which today are substantial towns were unknown even to John Shiels whose knowledge and memory of people and places was prodigious. "Where is Loxton's Hut and how does it fit in with Pinnaroo so that the railway can be extended from the latter place?" he asked "I cannot find it on my map". A year later Shiels himself was to visit Loxton's Hut accompanied by Scott but without those members of the Board who had proposed to make the trip but "jibbed" on finding it would take 7 or 8 days.
On his return to Adelaide he was able to convince the Board not only that the river settlement was "spreading and must result in large production" but also that "we ought to be in time to secure the business". "I have just returned from a week's business trip up the Murray as far as Renmark" he wrote to Arnold. "There are great possibilities for the country on the banks of the river although by many it is pronounced drought stricken and valueless". It was not only the potential promise of the country that he had seen which spurred him into action but the threat posed by a "virile competitor" in the form of a revitalised Commercial Bank of Australia Ltd. They had already opened a branch at Pinnaroo and rumour had it that they would "carry the war to Mannum". "We must not leave any strategic point on the river unoccupied" Shiels wrote to Scott and branches were opened in rapid succession at Loxton, Murray Bridge, Swan Reach, Tailem Bend and Keith. Using an "eight mile speed boat" or steamer the branches were supported by agencies at Blanchetown and Bowhill. Morgan and Pinnaroo were converted to branches and in 1911 a branch was established at Waikerie.
It was not only on the River and in the Murray valley that the Commercial was "on the war path". On Yorke Peninsula its officers "descended' upon Minlaton in 1909 seeking to break into the district. Their methods were not to lend their own money but to arrange loans from other sources against a mortgage of freehold property which made them a more dangerous competitor in those areas where most of the land was freehold. Shiels was driven to reinforce his position on the Peninsula by converting Curramulka and Edithburgh into branches and opening at Port Victoria where the great grain clippers, the Pamir and the Passat, lay off the coast awaiting cargoes and the long race home around the Horn. Maitland was considered and rejected. "Friendly" banks were already established and Shiels did not seek to attract advances. At Ardrossan however he took steps to make sure that word got around of his intentions to open in competition with the Commercial knowing full well that the manpower resources were too tightly stretched to make the threat effective. Had such a move been intended he would have ensured the utmost secrecy such as customarily surrounded even the transfer of a manager from one branch to another to prevent the Commercial from "making capital out of it". The carefully planted rumour however undoubtedly gave his competitor something to think about while he counter attacked along the river and in the mallee lands, districts which the Board was at length to visit towards the end of 1912 and from which they returned convinced "that it was a sound policy to establish a chain of branches on the river there being great prospects ahead".
In the North of the State the picture was slowly changing as the frontiers of the wheat lands were driven reluctantly back towards "Goyder's line". Pellew from hawker wrote that the men working in the district were of a "good stamp" and increasing their holdings to make them pay. Shiels agreed that "the farmer pure and simple must disappear from the country north east from Petersburg". Good reports were being received of copper prospects at Leigh's Creek where small men could make mining pay fairly well but the meagre copper lode ran out long before the immense resources of sub bituminous coal were opened up to ensure the States' power resources.
NEXT CHAPTER 8 : "LET EVERY HERRING HANG BY HIS AIN TAIL"
OR RETURN TO CHAPTER 1