"With Faith and Courage"


(Written by the late Ron A Potter)

Chapter 1.  Towards "A Local Proprietary"

Chapter 2. "The Adelaide Bank" Click Here.

Chapter 3. "Building the Business" Click Here.

Chapter 4. "The Best All - Round Banker" Click Here

Chapter 5. "The Unprecendentedly Severe Crisis" Click Here

Chapter 6. "The General Superintendent" Click Here

Chapter 7. "A Victorian Gentleman" Click Here

Chapter 8. "Let Every Herring Hang By His Ain Tail" Click Here.

Chapter 9. "The Mantle of Elijah" Click Here

Chapter 10. The "Savage Contingency" Click Here

Chapter 11. Adversity and Austerity Click Here

Chapter 12. "The Master Builder" Click Here


"The Society of Adelaide is essentially commercial, and those composing it are money seeking and money keeping" wrote a traveller in 1852. Had he revisited the city thirteen years later when leading citizens were planning a bank of their own, dedicated to the advancement of local interests, he would have had little reason to change his opinion.

South Australia from the very first was largely a commercial conception. Amongst its founding fathers were radical bankers, inspired by the teachings of Jeremy Bentham. These they sought to put into practice in a new land where no chains of tradition should restrain society from achieving the greatest good of the greatest number. They wanted freedom from government restraint and from the dictates of a distant and purblind Westminster. Their ideals were political, religious, and commercial liberty. Their moral and ethical standards were high but narrow, their practical experience as limited as their confidence was boundless.

The achievements of the academic and amateur colonists of South Australia in its early years were impressive. Self government was won in 1857 with a lower house elected trienally by manhood suffrage and secret ballot. Adelaide had the first elected municipal council in the colonies and boasted the first Chamber of Commerce. The strong element of Nonconformist radicals enforced the complete separation of Church and State.

The pattern of a new state was drawn but it remained to the true pioneers to give it substance. It was the farmer's plough, the miner's pick and the squatter's flock which enabled the colony to survive in those years when most of the new settlers clung obstinately to the rutted, stump strewn streets and empty town acres of Adelaide, deluding themselves that land speculation and smart dealings in imported goods were signs of prosperity, and that political and religious theories were a substitute for sweat and toil.

As in the other Australian colonies wool was the first staple export followed in the early forties by wheat. The copper bonanza at Burra and the mines at Kapunda attracted a burst of migration. Teams of oxen hauled the copper from the mines to the coast, where it was loaded as ballast on the wool ships. Ill found and leaky vessels first served the colony until the Navigation Acts were repealed in 1849 when fine new American ships put into Port Adelaide and the gulf ports, providing cheap, dry freight for wheat to markets overseas. At the same time an over supply of oxen at the mines enabled the farmer to end the drudgery of hand tillage and to increase the acres under plough.

By the middle of the century it seemed as if the future held the promise of steadily increasing prosperity and in Adelaide a new spirit stirred, as primitive industry replaced earlier stagnation. The news of gold strikes in Victoria changed the picture dramatically. Adelaide virtually emptied itself as able-bodied men made for the diggings, while farms and sheep runs were abandoned, and mines closed down at the lure of gold.

Although grass grew in the streets of the city, the ultimate effects of the gold fever were beneficial to the colony. The Bullion Act, a pragmatic if illegal solution to the drain of money to the fields, secured for South Australia a lion's share of the newly-mined gold. Disappointed diggers returned to their farms to find a greater profit in growing food for the miners than in seeking the elusive ore. Those who struck it rich brought back new capital. New highways to the eastern states were opened up and isolation ended.

The rural community prospered from the golden interlude, but in the city much of the new wealth was dissipated in a fresh land boom, made possible to some extent by Robert Torren's Real Property Act of 1858, conceived out of its author's difficulties in disposing of his own land before returning to England. This act, since copied throughout the world, provided cheap conveyancing and secure mortgaging. Bitterly opposed by the legal profession, whose pocket it touched, it required the amoval by the Executive Council of Judge Boothby of the Supreme Court, before it could be implemented. Industry, moreover, starved of labour, continued to languish as the craftsmen and skilled workers rarely returned to Adelaide from the workings but made their way to the boom-city of Melbourne.

High wheat prices were not maintained as Victorian demand fell but confidence was restored with the opening of the great copper mines at Moonta. The population, though small, was young and vigorous. Over half was under 21 years of age and only one in a hundred over 45. Nine-tenths were of British stock and already over one third were native born. Political guiding strings had been severed, men were conscious of their independence from Whitehall and Downing Street, and proud that their own brief history was not coloured with the penal origins of the other colonies. Financial independence alone was lacking to complete the pattern of a colony come of age.

The promoters of the South Australian Company were very conscious of the need for a bank in the projected colony and Roland Hill and George Fife Angas invited the Bank of Australasia to establish a branch in Adelaide. The invitation was declined as the bank was unwilling to make loans upon real estate, the only security the colonists would be able to offer. Consequently the Company decided to form its own bank and in its prospectus promised "the establishment of a bank or banks in, or connected with, the new colony of South Australia making loans on land or produce in the colony".

Edward Stephens, who had had banking experience in Hull, was appointed Deputy Manager and Accountant of the South Australian Company's banking department and set sail for Adelaide in the  "Coromandel". For over three months in 1837 he conducted his bank from a tent on the foreshore at Glenelg. "The hours of business almost to his principals '10 to 4', but I transact business almost at all times of the day and night. Presently I hope to make the colonists more regular in this matter". Over a hundred years later many a country bank manager was still entertaining the same hope.

Stephens, faced with the necessity of helping influential colonists over what he hoped would be the temporary financial difficulties of settlement, lent freely on "two signatures" but he was quickly checked by David McLaren, the Commercial Manager of the Company, who assumed control in 1837. McLaren a man of inflexible severity and piety, became financial dictator of South Australia using the banking department of the Company to advance its interests at all costs. With grim satisfaction he could report to Angas at the end of his first year that "the most deadly hated of the bank and to me is entertained."

The combination of company and bank provoked bitter criticism and the renewal of its charter in 1842 was only granted subject to the separation of the bank under the title of South Australian Banking Company. In Adelaide it continued to be known by the popular name Bank of South Australia which at last received official recognition in its charter of 1867.

Disliked by many, McLaren was nevertheless an astute banker and when a competitor seemed likely in the Adelaide Banking and Trust Company he offered higher rates of interest on deposits which effectively thwarted the project. When, on his return to England, he handed back control of the bank to Stephens it was soundly based and exceedingly profitable.

Stephens, although cured of his earlier laxity, was an indifferent banker and of uncertain nature. He was perhaps unlucky to lose the Government accounts to the Bank of Australasia which was opened on the 14th January 1839 to the great satisfaction of the majority of the colonists, particularly as it offered 4% interest per annum on current accounts and discounts at 8% compared with the Bank of South Australia's nil and 10%. As the years went on Stephens, who prided himself on being an out spoken radical in political matters, became more and more conservative. His poor judgement of future trends can be seen from his letter to the London board "I am of the opinion that these colonies are a good deal touched with the mania for branches not long ago prevalent in England." The board reposed little confidence in their Adelaide Manager and were peremptory in their dealings with him, writing on one occasion "nor must one additional 1- be drawn from England without express authority". Stephens, however, patched up his quarrel with the Governor, regained a share of the Government's accounts, and was finally a nominated member of the Legislative Council.

There were at least two attempts to form a local bank before 1865. The Adelaide Banking and Trust Co. in 1841 was a genuine if abortive effort to promote a bank in South Australia, whereas the Australian Agricultural Bank, which advertised on the 3rd November, 1838 in the South Australian Gazette and Colonial Register that it was to open two days later, was far from bona fide. A sign bearing the name of the bank appeared on two posts in Stephens Place. A long press advertisement urged men of capital and good sense to obtain prospectuses offering interest at 25% per annum on one year deposits and undertaking not to harass farmers to repay debts in bad seasons. Deposits in London could be lodged with Mr. Boucher, Secretary of the Bank of Australasia. A notice signed by Mr. Milne as Manager of the Australasia Agricultural Bank, in the "Southern Australian" advised that no part of the bank's funds were at present to be employed in serving the public for discounting of bills and loans but that notice would be given when the bank was to become a "Bank of Issue and Advance".

Within a week the Bank of Australasia announced publicly "a prospectus being in circulation issued by the projectors of the Australian Agricultural Bank at Adelaide in South Australia, in which it is stated that deposits intended for the proposed bank may be paid into the establishments of this Corporation in the Colonies or in London to the Agent of the Australian Agricultural Bank, Frederick Boucher, Esq. who is stated therein to be the Secretary of the Bank of Australasia : Notice is hereby given that Mr. Boucher is not the Secretary of this bank in London: that this bank has no connection whatever with the proposed Australian Agricultural Bank: nor will deposits be received for it at any of the Colony establishments of this Bank."

A few intending migrants were duped into purchasing worthless drafts on this wild cat bank. Boucher, a plausible rogue, started as a general store-keeper in Newcastle, New South Wales and added an unsuccessful Bank of Newcastle to his business. Later he was a wine and spirit merchant and commission agent in Sydney. On the basis of his own recommendations he was provisionally appointed secretary to the Bank of Australasia and after two and half years he was made accountant in London and resigned to mismanage the British Australian Bank and to float the fraudulent Australian Agricultural Bank. The Bank of Australasia was to support a distressed gentlewomen who claimed to be the second and only surviving daughter of Fredererick Boucher, Secretary to the Bank. She died in 1940 aged ninety three.

Milne, the self-styled Manager of the bogus bank, variously held himself out as a professor of Greek, a clergyman of the Church of England, and a well connected business-man. In later years he seems to have become a religious crank, served a term in goal as an insolvent debtor, and was convicted in the Adelaide Court for drunkenness.

Adelaide citizens had little to cause to be satisfied with the two existing banks. On the other hand the Bank of South Australia never completely lived down its reputation for putting the interests of the South Australian Company first, on the other the Australasia was hamstrung by its involvement with the failure of the Bank of Australia in Sydney. The copper boom accentuated the demand for capital, bit both banks agreed to make loans only against the shipment of ore. The time was ripe for another bank to enter the Colony.

Angas, with his great influence in English bank and government circles, had been sought out in 1837 by the "promoters of the Union in London for support in their project". In return for his sponsorship and for an initial subscription to two hundred shares he had obtained an undertaking that the new bank would not enter South Australia to compete with the bank of the South Australian Company without the consent of the Board of Directors of that Company. It was clear, however, that the Angas agreement of 1837 could not prevail indefinitely. The first suggestions were for an amalgamation with the Bank of South Australia, but when t was pointed out to shareholders in the latter that this would involve surrender of their charter and the loss of the status of limited liability conferred thereunder, the overtures were rejected and a face saving consent given to the opening of the Union's Adelaide branch in January 1850. Although with the two great "Anglo" banks competing in Adelaide with the London-directed Bank of South Australia there would have seemed little need to provide further banks to meet the requirements of the infant colony, nevertheless the strong desire for independence which characterised the first quarter of a century of South Australian history would not be satisfied with anything less than a locally owned bank dedicated to the advancement of local industries and retaining local money within the colony. Tinline as Acting Manager of the Bank of South Australia was indeed feted and handsomely rewarded for his part in framing the Bullion Act, which contemporaries hailed as "saving the colony from ruin" in the gold crisis days of 1852, but this transient popularity did not shake the growing conviction amongst Adelaide's merchants and lawyers that they needed a bank of their own.

Foremost amongst the protagonists for a local bank was Abraham Scott, a bank clerk and a farmer in Devon who had become a leading merchant and pastoralist. In 1858 he abandoned his project to join forces with Cruickshank, the principal promoter in Melbourne of the National bank of Australasia, on the terms that all capital subscribed in South Australia enthusiastically welcomed the new bank which opened in December of the same year and its progress outstripped that of its Melbourne twin. It sought business with a vigour unknown before in South Australia, opening branches in the copper towns of Kapunda and Burra and the wool port of the South East, Robe. Under its own local Board of Directors, headed by Scott, it seemed that this bank would satisfy the pent-up demand for a strong local independent bank. Unfortunately its Deed of Settlement was ill contrived. The Managers of the three banks already established at first refused to recognise the new rival and for six months would not conduct exchanges with it on the grounds of the flaws in the deed and the disputes already being hotly argued amongst the Melbourne shareholders.

It was not long before a headlong collision arose between the Adelaide shareholders and those in Melbourne. Whilst vigour and enterprise marked the conduct of the Adelaide business, Melbourne was grossly mismanaged by Osmond Gilles, who was asked to resign. Frederick Wright the Adelaide Manager was called to Melbourne in 1860 and took with him instructions from the Adelaide Board to ascertain the prospects of buying the South Australian business of the Bank or of effecting a separation in some other way.

The local independence that appeared to have been achieved proved illusory. The Adelaide Board was legally subservient to Melbourne, and although the profits earned in South Australia, where over half of the bank's shareholders resided were fritted away in Melbourne, partly in illegal advances to the directors, there was no redress available and a further five years were to pass before the State was to see "a bank established with a local proprietary, and exclusively under local management."

Chapter Two "The Adelaide Bank" Click Here