"With Faith and Courage"
The Bank of Adelaide 1865-1965
(Written by the late Ron A Potter)
Chapter 2 : "The Adelaide Bank"
Within the brown stone walls of the Adelaide Club on North Terrace and at meetings of the Chamber of Commerce, which many credited with being the real government of the province, leading citizens were busy drawing up plans to share in "the enormous profits" which "went to enrich a foreign proprietary". These efforts were further spurred on by the entry of the English, Scottish and Australian Chartered Bank in early 1865 with branches at Adelaide, Kapunda and Kooringa (Burra).
The promoters of The Bank of Adelaide were headed by Henry Ayers. A lawyer by training, he had taken over the management of the Burra copper mine in 1845 at the age of twenty four, five years after landing at Port Adelaide from Portsea in Hampshire, and by shrewd investment had amassed a considerable fortune. Entering political life as a member of the Legislative Council in 1857 his ability and natural charm assured for him a leading role in the government. A born diplomat, he won the affection and respect of his contemporaries. Within six years he became Chief Secretary and Premier, and for years to come followed a Vicar of Bray career principally as Chief Secretary in the jack-in-the-box governments of the age.
Finance and banking were of special interest to Henry Ayers throughout his life and his meticulous analyses of banking statistics are still preserved. For three years he was a local director of the Bank of Australasia and not only knew the potential profitability of banking but had the practical experience and ability to guide the infant footsteps of a new institution.
By the middle of 1865 the plans of the promoters were complete and on the 5th June noth the Register and 'The Advertiser' published the following notice:-
"The Bank of Adelaide, capital £250,000 in 50,000 shares of £5 each, with power to increase the capital to £1,000,000 by the issue of new shares. Deposit of 2/6 a share on application, allotment call 17/6, the balance to be paid in calls of not more than 10/- per share at intervals of not less than three months between each call. PROMOTERS Henry Ayers, Fredk. Chas. Bayer, M D., John Dunn, George Peter Harris, I S Henry, William Morgan, Thos Magarey, William Peacock, Robert Barr Smith, Robert Alfred Tarlton, Thos. Greaves Waterhouse.
The promoters of the above bank, in bringing it before the public, are actuated by a conviction that the growing importance of the Agricultural, Pastoral, Commercial and Mining interest of South Australia demand additional banking facilities, the number of banking institutions in the colony having been only increased by two during the past 15 years. THE PROMOTERS are also of the opinion that the time has now arrived when a systematic attempt should be made to retain in the Colony the large profits arising from its banking transactions and this can only be effected by a bank established with a Local proprietary, and exclusively under local management."
Shares in other banks commanded a healthy premium, their record of profitability was high. Small wonder the office of Wm Letchford Agent to the Promoters in Waterhouse Buildings, Rundle Street, were flooded with immediate applications from citizens anxious to share in the fortunes of the new bank sponsored by such substantial and highly esteemed citizens and to support a local management, or in many cases merely to take the stag's quick profit.
Two months later, on the 9th August, the first general meeting of shareholders held at White's Rooms in King William Street. Between 200 and 250 members thronged the assembly room which was the focal point of public life in Adelaide in the last half of the century. It was here that culture mingled with commerce, where a decorous ball followed the improving lecture, and the revivalist preacher competed with the flickering antics of the cinema's Victorian precursors.
It was no easy meeting
over which Henry Ayers was called to preside. The very success of the invitation
to subscribe to the new bank had been a source of embarrassment to its promoters
and disappointment to many of its shareholders. Applications had been received
for over 180,000 shares and only 35,000 were available for general allotment. No
one seemed to be satisfied that they had been fairly treated, and there had been
talk of forming a second bank, to be called
the
City bank, but wiser counsels prevailed. The Chairman hastened to assure the
jostling throng that the promoters had received no more than the 1000 shares a
head as originally arranged and that no shares had been allotted to
non-residents, even though this had meant denying good friends outside the
colony the opportunity of participating in the fortunes of the Bank. As far as
possible shares had been distributed to give the widest spread of holdings
amongst all classes of the public and to enlist the broadest support for the new
institution.
Pictured at left : Sir Henry Ayers
An examination of the share register shows how punctiliously Henry Ayer's principles had been followed. The eleven proprietors, amongst whom Talbot Bruce, the Bank's solicitor, had replaced Dr Bayer, received no more than their 1000 shares to which they were entitled. Only fifty four applicants were allotted one hundred or more shares each. Amongst these were Joseph Fisher and William Thomas proprietors respectively of 'The Advertiser' and 'The Register', local newspapers whose friendly support could mean much to the new bank. They received four hundred shares each. Wm. Letchford, who handled the issue, was allotted two hundred and fifty shares, and Randolph Stow, solicitor and partner of Talbot Bruce, two hundred. Nine sheep farmers held between one hundred and four hundred shares a head, while such leading figures as Francis Faulding, chemist, Thomas Elder, merchant, Charles Rischbieth, draper, James Miller Anderson, draper, Alexander Hay, gentleman, William Gosse M D, and Frederick Taylor M D numbered amongst the larger shareholders. Adam Lindsay Gordon, occupation unrecorded, was a foundation holder of one hundred shares which he promptly sold, the certainty of a quick profit appealing to his volatile nature more than the prospects of longer term reward.
Smaller shareholders with less than one hundred shares were 1850 in number, with an average holding of fifteen shares a piece. The new bank was predominately urban in character with 1465 members residing in the city or its surrounding villages and 450 in country districts. Of the latter, sixty six dwelt at Kapunda, thirty one at Gawler, thirty at Burra, twenty five at Strathalbyn, and twenty at Goolwa or Port Elliott. One lone shareholder lived at Fowler's bay, the State's forlornest outpost on the Bight, one in New Zealand, two in Melbourne, two in England, and one in Geelong. The absence of these non-resident shareholders was expected to be a purely temporary nature.
One third of the applicants did not specify any occupation and of the rest one hundred and seven described themselves as gentlemen, ninety eight as farmers and seventy eight as publicans, seventy as drapers and forty five as agents. Twenty seven clergymen included James Farrell, Dean of Adelaide, and Christopher Augustine Reynolds, Priest at Morphett Vale, later Roman Catholic Bishop of Adelaide. Amongst the gardeners and the holder of eight shares was Thomas Playford of Norton Summit, grandfather of Sir Thomas Playford, Premier of South Australia from 1938 to 1965. Miss Joanna Wynn Daly, elder daughter of Sir Dominic Daly, Governor of South Australia, held ten shares in the bank with which she was later to be associated by much closer and more intimate bonds. Frederick William Londrum, billiard table keeper of North Adelaide and fore-bear of the world champion billiard player Walter Lindrum was allotted fifteen shares.
Bankers in the colony were quick to profit from their latest competitor and many of them turned over their money promptly to take advantage of the premium on their allotted shares. Amongst them was R G Wilkinson, later to become the Bank's second Manager and London director. In 1865 he was Manager of the National Bank of Australasia Limited at Kooringa and he soon sold his fifteen shares, preferring to speculate in mining issues in which it is said he made and lost two fortunes. Henry Turton, Secretary of the Savings Bank of South Australia was allotted seventy shares. John Martin, draper's assistant of North Adelaide, whose name is perpetuated in one of Australia's largest departmental stores subscribed to five shares. Charles Todd, manager of the telegraph Office, who linked Adelaide with Darwin and the world beyond by means of the Overland Telegraph was allotted twenty shares, while Dr Penfold of Magill, a pioneer in Australia's wine industry, held ten.
After Henry Ayers
had addressed the shareholders the meeting proceeded to elect the Board of
Directors and to fix the directors qualification at two hundred shares. In
addition to the Honorable Henry Ayers, Thomas Greaves Waterhouse Esquire, Robert
Bar Smith, Esquire, The Honorable Thomas Magarey, and George Peter Harris,
Esquire were elected as directors. Messrs Joseph Fisher, James Smith, and
Anthony hall were appointed Trustees for the shareholders and W Kay and J Brown
Auditors. It was announced that arrangement had been made for 50,000 notes to be
printed by Sands and McDougall in Melbourne and shareholders left feeling
certain that the new institution was in good hands which could be safely left to
carry out the further formalities necessary before it could commence business.
The newly appointed directors held their first meeting twelve days later and
chose Henry Ayers as their Chairman. Already they had appointed John Souttar as
Manager of the Bank at a salary of £900- a year, John
Stoddart as Accountant at £800- a year and Charles James Penny as Share Clerk at
£300- a year. Comparison with salaries paid to leading officials in the
Government Service show that these were
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quite
handsome and that the Manager at any rate was provided with a salary which would
enable him to live in style befitting one of the leading citizens of Adelaide.
Pictured at left John Souttar Manager 1865-1879 (Branches in this period 9)
At later meetings the Board selected premises at the corner of King William Street and Gresham Street comprising four rooms on the ground floor and five above at a rental of £240- per annum in which to commence business. Mr I B Neale, M P , owner of the building granting a lease for one year certain with an option to renew for four years. Carpenters and painters were set to work to redecorate the building which had earlier housed the Savings bank of South Australia. Mr W M Letchford who had handled the floation of the share issue was paid three hundred guineas for his services and the good offices of the Honorable O M Solomon and William Milne M P were sought to steer a private bill through Parliament for statutory consent to the formation of the Bank and its Deed of Settlement. Further officers were engaged in the persons of J H Wesley, Teller at £250- a year, J H Luxmore, Ledger Keeper at £200- a year, and P E P Loessel, Junior Clerk at £100- a year, and a Messenger at 47/- a week.
Arrangements were made with the Union Bank of London to act as agent in the city; four years later Souttar's old bank the Oriental was to take over the agency. The Commercial Banking Company of Sydney was to act for the bank in New South Wales, the beginning of a close and cordial relationship that has lasted throughout a century while the Colonial Bank of Australasia undertook the Victorian agency. With preparations so far advanced, all that was now required was the passing of the appropriate Act, and accordingly on October 5th a petition was presented by Mr Milne in the House of Assembly from Robert Barr Smith and Thomas Greaves Waterhouse praying for leave to introduce a Private Bill to incorporate a Joint Stock Association to be called "The Bank of Adelaide". The passage of the bill through both houses was made easier in that is was based almost verbatim on the National Bank Bill. At the second meeting, the Select Committee appointed to examine the bill recommended it to the lower house, subject to an amendment restricting advances to directors or officers of the bank collectively to one third of the total subscribed capital. Members seemed little concerned with the bill, the Hon A Blyth, after complaining that due to the faulty construction of the Chamber he could barely hear the remarks made, supported it, as did Mr Neal who referred to his premises already waiting to be let to the bank and to the good reception given the proposed institution by the existing banks, so different from the hospitality with which the National Bank had been greeted.
In the Legislative Council a more lively interest was taken in the bank bill. G F Angas objected to the lowness of the value of the shares complaining that a five pound share enabled the working classes to come in and hold a few shares. He deprecated the power given to the Bank to open branches elsewhere and would have preferred a provision that the Bank be wound up if there was a 25 per cent loss of capital. Despite Angas's carping criticisms the bill was duly passed in both houses and on Tuesday, December 5th, 1865 the Queen's assent was given to "An Act to authorise the shareholders in a Joint Stock Company or Association called "The Bank of Adelaide" to carry on the business of banking in the Province of South Australia, to incorporate such shareholders under the style or title of "The Bank of Adelaide" and to limit their liability.
On the following Monday, John Souttar opened the doors at Gresham and King William Street to the Bank's first customer. To Henry Ayers went the rightful distinction of opening the first account with a credit of £104:16:0d paid in by Henry Rymill, later to become a Director, and the grandfather of the present Chairman, the Honorable Sir Arthur C Rymill. It was not a hard's work for the officers of the new bank. Twenty one credits were accepted, eleven cheques paid, and one draft on Sydney sold. By the end of the week, Mr Souttar was able to report to the Board that 57 current accounts had been opened with a total balance of £25,400:18:7d and 22 bills discounted. The Directors could well congratulate themselves on an auspicious start and devote their attention to opening branches at selected points.
Kapunda, the booming copper town of just on 5,000 souls, was selected for the first branch. Dr Blood, Mayor, and a number of other citizens were already shareholders and ready support could be confidently expected. Accordingly, early in January, 1866, Mr Penny, the Share Clerk, set off for Kapunda at the terminus of the North Line in one of the State's two first class railway carriages, drawn by a locomotive of Stephenson's make, to open the branch. As he was carried over the flat plains and through Gawler he probably wondered whether the Government would succeed in selling the railway which had cost the colony three quarters of a million pounds to construct. No one, however, was prepared to offer even half its cost, and the railway was to remain the Government's property and responsibility. The future was to link the growth of the bank closely to the development of the railway network. The directors had already purchased a site in Kapunda's busy main street and had engaged Messrs Wright and Woods to furnish a design for a substantial and dignified bank and residence. In March a tender for the building had been let to Mr W Nicholson for £2,200- but by then Mr Penny, having successfully opened the branch, had returned to Adelaide leaving the management to mr William Garsed.
In the meantime a branch had been opened at Goolwa, the port of the River Murray served by thirty six paddle steamers which plied their trade up and down the river. The perennial hope ran high that a deep sea port would be formed at Port Elliot and that the Murray would become the main commercial artery of the continent. The Port Elliott, Goolwa, Victor Harbour tramway was the short link between river and ocean and the two and a half thousand people who lived near the Goolwa wharves or the Port Elliott jetty felt its future was assured. In early February Mr E S Burkitt set off by coach as the opening officer of the Goolwa Branch and an agency was started at Port Elliott in charge of Mr Perryman. Mr Burkitt did not stay long for within a month he was opening the Gawler branch and competing with the older established banks for a share in the business of the thriving, bustling town twenty five miles to the north of Adelaide. The initial burst of activity must have imposed a strain on the staff resources of the infant bank and there was a short pause before Mr G A Connor commenced business at Port Adelaide at the end of September.
With the opening of the Port Adelaide Branch the inaugural pattern of the Bank was complete and the directors and management set about the task of building up a profitable business. The pattern was carefully chosen even though time was to twist it awry. Port Adelaide, linked by rail with the capital, had long lost its old name of Port Misery, although until the limestone bar was dredged up the larger shops were still hampered at low water and could not get out of the basin at neap tides. Kapunda was to flourish while the vein of copper lasted and once exhausted could look to a quiet future as the centre of a safe agricultural district. Branches are still conducted at both points. At Gawler the Bank met strong competition from the older Banks and although for almost thirty years it carried on a profitable and substantial business, it did not achieve a dominant position in the town, and when the 1893 depression brought commerce almost to a standstill, the Bank regretfully closed its doors. Goolwa it was felt would surely prosper. It seemed that sooner or later a deep sea port was destined to open up the Murray to the World's shipping and that the fifty or so miles of railway that the Government was earnestly trying to sell could never be so expanded as to serve the endless miles of the interior. The dream of the deep sea port has never completely faded, but the old steamers have disappeared from the river, only a few are being preserved to remind the tourist of past glories. It was the railway, not the river, that was to open up the State and the bank was to grow in step with the iron road. The Directors were quick to see there was no substance to the dream, and the Goolwa Branch was closed in 1868.
When the Directors accounted to Shareholders at the first Annual General Meeting on the 7th January, 1867 in the Assembly Rooms, King William Street, they could justifiably claim that the Bank had been established on solid foundations from which further sound progress could be made. At Adelaide alone 557 accounts had been opened and amongst them were numbered many of the City's leading businesses. Deposits stood at over £100,000, advances and bills receivable exceeded a quarter of a million pounds, and a net profit of £6,531- had been earned to be transferred to reserves.
Chapter Three. "Building the Business" Click Here