Literary Views & Reviews

Press, Volume C, Issue 29626, 23 September 1961, Page 3

Literary Views & Reviews

TWO BANKS COMMEMORATE 100 YEARS IN N.Z.

pell Printed by WOmo •a* KMton far «« Bank •f New Zealand. 486 pp. Open Aecean*. A history «f the Bank ef New Swth Watos ta New tend IMI-IWL By Kieto Btoclslr and W. F. Mandle. WhjtoMnbe A Tmk 282 »■ One hundred years ago two banks which were to have very great importance in the history of New Zealand began operations in this country. Both the Bank of New South Wales and the Bank of New Zealand have marked the centenary of their foundation by publishing histories. The former bank, it will be recalled, also established scholarships to promote advanced studies in economics to mark the occasion. Possibly the dividends in expert knowledge derived from this generous act will prove at more lasting benefit to this country but, in the meantime, the histories will attract most attention.

Both books are official publications, issued by institutions not normally given to divulging intimate details as to their operations. Official histories are frequently suspect, especially when issued to mark occasions normally given to celebrations. Such occasions naturally lend themselves more readily to seif-congratulation than to self-criticism. Although Mr Chappell’s book sometimes tends to become the conventional '‘official” history, this is only at limited points where he gives praise to officers of the Bank of New Zealand beyond what one might expect in obituary notices. Actually, both books are thoroughly creditable efforts and their publication marks a distinct advance in the field of New Zealand banking history.

‘Banker’s Hundred” is at once a larger and a longer book than "Open Account.” It is better and more impressively bound than its contemporary publication. It will certainly make a more imposing volume on a bookshelf but, when it comes to a comparison of contents, this reviewer must express his preference for “Open Account” The “Wales” wisely decided to commission two members of the History Department’s staff at the University. of Auckland to write their history, opening up their archives and giving Professor Sinclair and Dr. Mandle unrestricted access to the Bank’s records, with the important but essential exception of the current account of firms and individuals. The result is a first-class work, which is genuinely informative, frequently entertaining and altogether a valuable addition to the economic history of New Zealand. Favoured with rich -source material, the joint authors have woven an attractive story of an important banking institution, of its directors, manager, and inspectors, and of its ups and downs in the gold rush, dairy farm expansion, and depression days altogether with anecdotes and comments on the general historical background of the times. "Banker’s Hundred” is more of a banker’s history for bankers, but it is a thoroughly good straightforward account of the many vicissitudes in the life of our most important bank. Mr Chappell, the author, has been associated with the Bank of New Zealand since 1907. He has therefore known personally most of the prominent men connected with it during the last fifty years and he has certainly known the bank from the inside. He began working on the bank’s history ten years ago, first as a hobby and then, on his retirement from active service in 1954, more seriously. The result of his labours is a detailed story which explains every major move in the management, expansion and control of the Bank of New Zealand during the last hundred years. Although Mr Chappell has been less critical in his approach to his task than the two professional historians, and has sometimes shown a tendency to gloss over errors of judgment on the part of his bank's leading, officers, he has not hesitated to castigate some bank managers nor scrupled to tell some stories which reflect no credit on those concerned.

The Bank of New South Wales was founded in Sydney in 1817, mainly at the instance of Governor Macquarie. Only in April 1881 did its managers feel ready and able to cross the Tasman. On June 11 the "Wales” opened its first New Zealand branch in Auckland. It took over from the expiring Oriental Bank branches in Auckland. Wanganui. Wellington, Dunedin and Invercargill. In addition, it opened branches at Christchurch and Lyttelton and, in 1862, in Nelson. Further expansion came quickly with the development of payable goldfields.

The Bank of New Zealand opened its first branch in a former draper’s shop in Queen Street. Auckland, on October Ift 1881. Its opening was closely connected with the opening of the “Wales.” In addition to natural local opposition to a bank from another colony, ’“a foreign bank,” one of the principal founders of the Bank of New Zealand had not been treated as he thought he should have been treated by the new bank’s manager. This was Thomas Russell. With him were associated such prominent citizens as Dr. John Logan Campbell, “the Father of Auckland,” James Williamson, a merchant, Thomas Henderson, shipowner member of the Legislative Coun-

llteviewed bp AJtJ cil and chairman of the New 1 Zealand Insurance Company, I and James O’NielL a busin--1 essman and member of the i Provincial Council. Russell deserves separate treatment even in a short i review. Bom in Cork, he arrived in Kororareka in 1839] , but later moved to Auckland where he qualified as a solicitor. He entered into : partnership with Frederick Whitaker, who later became Speaker and AttorneyGeneral and eventually Prime , Minister, in both 1863-4 and 1882-3. Russell also entered Parliament and became Defence Minister during part of the Maori Wars. These two gentlemen were behind many big deals in Auckland and were solicitors to the New Zealand Insurance Company, the Bank of New Zealand, the New Zealand Loan and Mercantile Agency, the Fiji Banking and Commerical Company and other concerns. Mr Chappell mentions that Whitaker was sure that Russell would think it "the height of impropriety to use the bank for a political purpose.” What is not so clear is toe converse, whether or not Russell and Whitaker used their political influence to advance their private and business interests. In any case, the old Oriental Bank had found Russell's account troublesome and the “Wales” hesitated about accepting it The delay annoyed Russell, who not only threatened to found an opposition bank but was as good as his word. Drs. Sinclair and Mandle say: “Russell was a ruthless and aggressive businessman, whose continuous speculations eventually ruined him ... In the country’s political history, he is one of toe few sinister figures, whose name rarely appears in school books, but who was, as Larkworthy wrote, a “power behind the throne.” Though many people distrusted him, he was able and plausible.” Mr Chappell refers to him as “the moat colourful member of the group ... a forceful, alert and astute man who had already become a powerful figure in company flotation and land speculation ventures.” “He was a man of immense activity—and of untold ambition.” Russell was a member of the bank’s board in Auckland from 1861 to 1875, and president from 1867 to 1873. Later he became a member of the London board of the bank. But even Mr Chappell is constrained to state of Russell "Later . . . some of his investments proved distinctly embarrassing to the bank, for, in the words of Larkworthy, “many of his motives were in a large measure self-regarding.”

Both books tell of the adventures of the early bank agents and managers in Central Otago, 'the West Coast and in the raw conditions in new settlements. One of the more exciting incidents followed the purchase r for the Bank of New Zealand by Larkworthy of gold ;at Wetheretones. He used ’ ‘‘bank notes” he had himself prepared on writing ; paper. An Irish miner had ' one of these home-made notes turned down by the ; Union Bank in Waitahuna as a "duffer.” Returning to , Wetherstones, he tried to ext change the bank-notes for , gold with the storekeeper who had been Larkworthy’s , agent. Very injudiciously the . storekeeper offered 10s in the pound for the notes. Soon . a crowd of miners believed . they had been duped and > threatened to take action and . to pull down the store. A policeman took the store--1 keeper in charge and chained i him to an iron bedstead in , his tent. Only the return of ■ Larkworthy with about eight ■ thousand sovereigns, all he could collect in Dunedin, sufficed to restore the confidence of the miners and to dispel the first crisis in the history of the Bank of New Zealand.

> Drownings, robberies and . other dangers of those days i were all part of the lot of the s banker or his agent But » much worse crises were to 1 come for the banks of the r small colony which struggled • through the various depres. r J*’’’ 8 I'Jth century. - Both histories tell of probs letns faced and more or less 1 solved. The s Wales” appears to have ; pursued the more conservai tive policy during those diffl- . cult years and its history is . therefore the less exciting in : retrospect. Its historians reI ter to the manner in which > banks, including the B.N.Z. “advanced money unwisely” and how they had failed to solve the problem i of central control of man- ’ agers. f The “Wales” records obr riouely contain information ■ and opinions relevant to the > Bank of New Zealand. For i example, in 1890 it seems ' that a director of the Bank i of New Zealand in London i approached the chairman of c the London Board of the ■ Bank of New South Wales, i in a “friendly and unofficial • to propose that the • ’Wales’ should absorb the 1 Bank of New Zealand.” ’ Other pages suggest that the collapse of the latter bank ■ was viewed with “a certain pleasurable anticipation” by 1 the officers at its competitor. But it did not collapse. It was saved by the intervention of the Government, de- ’ termined to prevent a cal- ' amity of the first magnitude . for the whole country. Mr Chappell describes at length the State action taken in 1894 and the supplementary , actions taken in later years. I Drt Sinclair and Mandle say , of the 1894 revelations, “The , Bank of New Zealand had . quite misled the Government . about the extent of its diffi- , eulties, which were dis-

which were dig. closed, as it were, by stages over the next few years.” But Mr Chappell, while he indicates that a more unsatisfactory situation was eventually revealed “than

their worst fears had led the directors to expect,” exonerates those concerned of any deliberate intention to mislead.

With a Government guarantee and with Government representation on its directorate, the Bank of New Zealand advanced into the 20th century. In 1902 it paid a dividend, the first for eight years. By 1911, both banks were in strong positions. Although there was talk of establishing a State Bank, both the dir«rtors and the Government at this stage preferred a partnership between the State and the private shareholders of the Bank of New Zealand. This bank was now clearly the most important in 'the Dominion, since it had over 130 branches and agencies. The “Wales” by 1911 had 49 branches and eight agencies in New Zen. land.

In some respects, the historians become more reticent as they approach the present. The “Wales” partners are particularly good in dealing with the exchange problem which arose in the depression years, while Mr Chappell is more concerned with the emergence of the Reserve Bank of New Zealand in November 1933. In the age of the welfare state and of increased controls, both banks came under increasing pressure to take heed of State dictates. Eventually, in November 1945. the private

shareholders were eliminated from the Bank of New Zealand and it was acquired by the State. Normally very reluctant to express a personal opinion, Mr Chappell does indicate his feelings on this question. With reference to the proposed , State-owned institution he says it was not clear “how much a bank was to provide a more reliable, prompt and economical service than had been given in the past.” With regard to Mr Walter Nash’s statement in his pamphlet "Financial Power in New Zealand—The Case for a State Bank” that banking policy "is always determined in the interests of the shareholders and financial corporations of the Dominion,” Mr Chappell has no hesitation in terming it “hardly accurate, for the bank has always had regard to the interests of its smaller customers and the country as a whole. Dr. Sinclair and Dr. Mandle end their admirable book by answering in the affirmative the question: “Are bankers human?” They prove their point by telling some excellent stories based on their findings in the archives. Mr Chappell does not need to ask this question. He has known from his own experience how human the bank’s officers have been and are. He concludes with some reminiscences of practices that have been superseded. Typewriters have come in, golden sovereigns have gone out, but, despite the recurrence of problems more or less inevitable in a dependent economy as illustrated when progress is being made towards Britain’s entry into the European Common Market, both banks are bigger and stronger than ever before .

Both books are fully and admirably illustrated, with “Banker’s Hundred” having the better selection of photographs and reproductions of documents, bank-notes and cheques. Thus the cheque for ten million pounds, which the New Zealand Government gave to Britain in recognition of “the enormous burden carried by the Mother Country during the war and post-war years” is reproduced and shown to have been drawn on the Bank of New Zealand. Both books are well indexed, but “Open Account” alone has adequate documentation of sources.