The Union Bank of Australia, Limited,
head offices, London. General Manager, Mr. David Finlayson, Melbourne; Resident Inspector in New Zealand, Mr. George E. Tolhurst, Wellington. New Zealand head office, corner of Lambton Quay and Featherston Street, Wellington. The Union Bank has been in existence nearly sixty years. It was a natural emanation of the great spirit of Australasian colonization, which may be said to have been at its highest about that period. As such its birth and development must ever be interesting to colonists, for there is probably no other institution doing business in the Southern Hemisphere whose history gives so faithful and so concise a record of the ups and downs inseparable from the great work of developing the varied but hidden resources of new countries. The prospectus of this most successful bank was issued in London bearing the date of the 1st of September, 1837. It was a quiet little prospectus. There was no soaring into the airy altitudes frequently scaled by the drafters of such documents in the colonies: but it was headed with names of substantial Englishmen, who indicated that there was a demand for capital at the Antipodes; that the bank interest there was eight per cent., and that the financial institutions already opened were paying an average of fifteen per cent, on paid-up capital. The directors, in their first report, were able to say: “The favourable light in which the Union Bank was viewed by the public is evident from the fact that the whole of the shares were taken as soon as issued without having been offered for sale by advertisement, and the deposits and instalments paid up without any default.” A strong bank from the beginning, it was powerful in its effect upon commerce in Australasia; and the confidence which its successful establishment evoked throughout the colonies soon showed itself. Seven thousand shares (the deposit was £5 per share) were rapidly taken up by colonists, notwithstanding that a condition was imposed that the shares were not to be transferred to the Old World. Though from the first ample provision was decided upon and adhered to in the matter of reserve funds, little or no attempt has been made at a uniform dividend. The profits have been dispersed in dividends pretty much as they were made, and the record of this Bank's profits indicates very closely the course of colonial mercantile operations. In the earlier years, until 1851, dividends ranged from ten to six and back to ten per cent. In 1852 a dividend of eleven per cent, was declared, when a most exciting change took place. In 1853 a sum of £25,541 was carried to the reserve fund, and a dividend of thirty-three per cent. was paid to the shareholders. This was followed in 1854 by a dividend of thirTy-Six per cent, and in 1855 by one of thirty per cent. Thus in three years ninety-nine per cent, of the shareholders' paid-up capital was returned to them. These gigantic profits were, of course, the result of the gold discoveries in Victoria. From that time to the present regular dividends have been obtained, as will be seen from the following table, which shows the yearly profits and distributions of the Bank from its birth:—
Year. |
Net Profits. £ |
Net Profits. s. |
Net Profits. d. |
Paid-up Capital £ |
Div. and Bonus. Rate |
Div. and Bonus. Amount. £ |
Carr'd to Reserve Fund. £ |
June 20 |
|
|
|
|
|
|
|
1840 |
48,946 |
6 |
6 |
373,337 1/2 |
* 32% |
32,000 |
4,894 |
1841 |
65,743 |
0 |
0 |
542,787 1/2 |
*25% |
50,000 |
6,574 |
1842 |
82,099 |
3 |
9 |
743,525 |
*25% |
68,000 |
8,209 |
1843 |
93,850 |
0 |
6 |
806,130 |
10% |
82,000 |
9,385 |
1844 |
58,878 |
10 |
6 |
813,730 |
7% |
57,400 |
5,082 |
June 30 |
|
|
|
|
|
|
|
1845 |
55,781 |
9 |
5 |
820,000 |
6% |
49,200 |
5,578 |
1846 |
56,059 |
12 |
4 |
820,000 |
6% |
49,200 |
5,605 |
1847 |
46,727 |
19 |
4 |
820,000 |
6% |
49,200 |
4,672 |
1848 |
63,762 |
6 |
11 |
820,000 |
6% |
49,200 |
6,373 |
1849 |
73,468 |
17 |
11 |
820,000 |
8% |
65,600 |
7,346 |
1850 |
88,566 |
6 |
7 |
820,000 |
9% |
73,800 |
8,856 |
1851 |
92,760 |
8 |
10 |
820,000 |
10% |
82,000 |
9,276 |
1852 |
118,268 |
1 |
5 |
820,000 |
11% |
90,200 |
11,826 |
1853 |
267,793 |
6 |
5 |
820,000 |
33% |
270,600 |
27,541 |
1854 |
295,963 |
4 |
10 |
820,000 |
36% |
205,200 |
— |
1855 |
238,459 |
8 |
2 |
820,000 |
30% |
246,000 |
— |
1856 |
194,171 |
7 |
2 |
820,000 |
24% |
106,800 |
— |
1857 |
155,615 |
1 |
10 |
820,000 |
19 1/2% |
159,900 |
— |
1858 |
157,717 |
4 |
10 |
820,000 |
20% |
116,000 |
— |
1859 |
173,974 |
3 |
2 |
1,000,000 |
18% |
172,000 |
— |
1860 |
146,466 |
6 |
9 |
1,000,000 |
15% |
150,000 |
— |
1861 |
120,885 |
9 |
8 |
1,000,000 |
12% |
120,000 |
— |
1862 |
140,571 |
14 |
9 |
1,000,000 |
14% |
140,000 |
— |
1863 |
163,871 |
2 |
2 |
1,000,000 |
16% |
160,000 |
— |
1864 |
175,442 |
5 |
6 |
1,313,325 |
17 1/2% |
180,005 |
— |
Carried forw'd |
3,185,845 |
19 |
3 |
21,072,835 |
|
|
121,217page 504 |
Year. |
Net Profits. £ |
Net Profits. s. |
Net Profits. d. |
Paid-up Capital £ |
Div. and Bonus. Rate |
Div. and Bonus. Amount. £ |
Carr'd to Reserve Fund. £ |
Br't f‘w’d |
3,185,845 |
19 |
3 |
21,072,835 |
|
|
121,217 |
1865 |
222,074 |
2 |
7 |
1,250,000 |
18% |
225,000 |
— |
1866 |
212,597 |
2 |
5 |
1,250,000 |
17% |
212,500 |
— |
1867 |
212,787 |
17 |
2 |
1,250,000 |
17% |
212,500 |
— |
1868 |
202,366 |
11 |
8 |
1,250,000 |
16% |
200,000 |
— |
1869 |
185,667 |
11 |
4 |
1,250,000 |
15% |
187,500 |
— |
1870 |
170,163 |
0 |
4 |
1,250,000 |
13 1/2% |
168,750 |
— |
1871 |
155,295 |
16 |
10 |
1,250,000 |
12 1/2% |
156,250 |
— |
1872 |
164,164 |
14 |
10 |
1,250,000 |
13% |
162,500 |
— |
1873 |
165,375 |
12 |
10 |
1,250,000 |
13% |
162,500 |
— |
1874 |
172,463 |
8 |
2 |
1,252,000 |
14% |
175,000 |
— |
1875 |
201,707 |
13 |
5 |
1,252,000 |
16% |
200,000 |
— |
1876 |
201,345 |
3 |
2 |
1,250,000 |
16% |
200,000 |
— |
1877 |
221,550 |
15 |
2 |
1,252,000 |
16% |
210,000 |
25,000 |
1878 |
237,765 |
13 |
11 |
1,467,216 |
16% |
210,000 |
25,000 |
1879 |
273,905 |
7 |
8 |
1,487,500 |
16% |
235,907 |
36,000 |
1880 |
236,559 |
13 |
2 |
1,500,000 |
16% |
240,000 |
— |
Feb 28 |
|
|
|
|
|
|
|
1881 |
222,801 |
1 |
2 |
1,500,000 |
15% |
225,000 |
— |
1882 |
219,643 |
8 |
9 |
1,500,000 |
15% |
225,000 |
13,500 |
1883 |
344,019 |
8 |
4 |
1,500,000 |
17% |
225,000 |
80,000 |
1884 |
300,963 |
3 |
10 |
1,500,000 |
17% |
255,000 |
40,000 |
1885 |
256,529 |
13 |
2 |
1,500,000 |
16% |
240,000 |
20,000 |
1886 |
225,122 |
16 |
11 |
1,500,000 |
15% |
225,000 |
10,000 |
1887 |
194,056 |
16 |
10 |
1,500,000 |
13% |
195,000 |
— |
1888 |
181,440 |
10 |
2 |
1,500,000 |
12% |
180,000 |
— |
1889 |
209,413 |
4 |
2 |
1,500,000 |
13% |
195,000 |
20,000 |
1890 |
214,697 |
4 |
4 |
1,500,000 |
14% |
210,000 |
— |
1891 |
210,624 |
10 |
3 |
1,500,000 |
14% |
210,000 |
— |
1892 |
175,052 |
15 |
5 |
1,500,000 |
12% |
180,000 |
— |
1893 |
154,261 |
0 |
1 |
1,500,000 |
10% |
150,000 |
— |
1894 |
104,426 |
17 |
6 |
1,500,000 |
7% |
105,000 |
— |
1895 |
81,818 |
17 |
2 |
1,500,000 |
5 1/2% |
82,500 |
— |
|
9,538,537 |
11 |
3 |
9,133,212 |
|
|
391,232 |
£14,902 15s. 2d. was carried forward on the 28th of February, 1895. This is a wonderful dividend-paying record, and it is, of course, to be regretted that the last few years have witnessed so great a falling-off. The banking crisis in Australia was quite enough reason for this temporary decrease of profits. What concerns the commercial world is that the Bank has been strong enough to hold its own and make large provision for doubtful debts, besides writing off those known to be bad. That this has been the case when so many bank failures have occurred in the sister colonies is most creditable to the directors and officers both at Home and throughout Australasia. That the business done is large may be inferred from the fact that last year the gross profits were upwards of £320,000. The assets on the 28th of February, 1895, amounted to £22,633,327, 16s. 3d., about five millions being represented by specie, bullion, consols, and British, Indian, and colonial stocks. Bills discounted and loans to customers represented about fifteen millions. The paid-up capital of the Bank is £1,500,000, and the reserve fund stands at £1,000,000, half of which is invested in Imperial and other stocks, and the remainder in the Bank's premises and property. The liabilities of the Bank of depositors and others, including the note circulation and the reserve held against doubtful debts amounted to £20,081,735 1s. 1d. Besides the reserve fund of £1,000,000, there is a reserve liability of shareholders of £3,000,000, thus giving in all a margin of nearly six millions in excess of the Bank's liability to outsiders. This is, of course, an extremely satisfactory position; and there is every reason to believe that the present decrease of profits will be of short duration. As showing the name which the Union Bank made for itself in the past as a dividend paying institution, it may be mentioned that the difference between the amount shown in the above table as having been paid out of profits to the reserve fund, and the amount at which that fund actually stands, has been mainly drawn from the premiums received on the issue of new shares, which were transferred direct to the reserve fund. In 1878 and the following year nearly one-third of a million was in that way added to the reserve fund, no less than 9500 shares having been issued at a premium of £33 per share. Before enumerating the various branches, it may be interesting to New Zealanders to trace its growth in their own Colony. Though far from the oldest Australasian banking institutions, the Union Bank must ever have the honour of being the first to do business in this Colony. Before the site of Wellington was surveyed the Union Bank had established its first New Zealand branch on the beach at Petone. When the site of the present Empire City was laid out, and the township of Britannia, as it was then called, sprang into existence, the Union Bank was quick to recognise the advantage of removal. There was no road in those days connecting the two places, and it was necessary to construct a raft, on which the Bank's safes were floated across the harbour. This was in 1840, and in view of the facts that the prospectus of the Union Bank was dated in London the 1st of September, 1837, and that the first report of directors was presented there on the 26th of June, 1839, it is evident that the management of the young bank was in the hands of far-seeing men. In the second report of directors, “presented at the general meeting of the proprietors ” in London on the 25th of June, 1840, the following reference was made to its connection with this Colony. “During the first year a satisfactory arrangement has been made with the New Zealand Company for the transaction of their monetary affairs and the establishment of a branch in their first settlement. Mr. John Smith has been entrusted with the management of this establishment, a gentleman peculiarly suited by his experience and ability for such a trust.” It may be remarked here that Mr. Smith did more than proving himself thoroughly worthy of the confidence reposed in him by the Union Bank. In many ways he was most useful in promoting the welfare of the settlement, taking unusual interest in the inauguration of the institution common to older places, but which, but for Mr. Smith's influence, Wellington would have long been without. Among these may be mentioned the first library in Wellington, which was helped into existence by Mr. Smith during the first few months of his residence on these shores. The local directors at that time were Dr. Evans—a name prominent in the history of Wellington—Mr. E. B. Hopper and Mr. George Hunter, who was the first mayor of Wellington and a prominent man in the city till the close of his life in 1880. That the banking business of the embryo capital in those days was not gigantic may be inferred from the paragraph appearing in a supplementary report of directors presented at a special general meeting in January, 1841, which says, “The New Zealand Branch must still be considered in its infancy. Only a few weekly returns have as yet been received; the directors, however, see no cause to regret their having acceded to the wishes of the New Zealand Company in its establishment. In the report for 1842 the name of Mr. Hopper, after whom Hopper Street was probably named, is omitted from the list of local directors at Port Nicholson, and the Nelson branch appears for the first time, managed by Mr. Alexander McDonald, and under the local directorship of Mr. H. A. Thompson.
page 505
Referring to this Colony, the Home directors say, “During the past year your directors have made preparations for establishing a branch at the settlement of Nelson, in New Zealand. This has been done in accordance with an arrangement already stated to have been made with the New Zealand Company, and your directors have great satisfaction in stating that the success which has attended the branch at Port Nicholson justifies a more extensive connection with the operations of that highly respectable body. With the report of January, 1844, the local directors of the Bank in New Zealand disappear, and two years later the following suggestive remark finds a place in the report. “The branches in New Zealand have been greatly reduced during the half year, and may now be regarded rather as small exchange agencies than as branch banks. The inspector has announced his determination not to allow them to be increased until he is fully satisfied of the security and prosperity of their colonies.” The Nelson manager was at that time removed to Wellington. More hopeful expressions of opinion occur occasionally, and in 1848 the establishment of a branch at Auckland, “the seat of Government,” is demanded under the management of Mr. Alexander Kennedy. On the founding of the Canterbury settlement, the assistance of the Union Bank was again invited, and in April, 1850, arrangements were entered into for the establishment of an agency at Lyttelton, to be managed by Mr. Q. K. Gale. Some six years later an agency was opened at Christchurch, that at Lyttelton having meanwhile been raised to the dignity of a branch. The history of the Union Bank in New Zealand is so closely connected with the history of the Colony itself that details which might otherwise be wearisome become full of interest when it is remembered that the reports of this bank for the past sixty years or thereabouts, which have been kindly placed at the disposal of the compilers, give a most accurate diagnosis of the financial condition of the Colony since its foundation. In 1857 the Dunedin branch appears in the list of “Colonial Establishments,” making six in New Zealand, as against four in New South Wales, three in Victoria, and two each in South Australia and Tasmania, or Van Diemen's Land, as that colony was then called. The year 1858 saw the establishment of a branch at Napier, and in 1861 Invercargill was similarly favoured. Picton was added to the list in 1865, and Hokitika and Timaru in 1867, Picton having meanwhile disappeared. In 1872 a change of importance to the Colony took place, namely, the appointment of Mr. Joseph Palmer, of Christchurch, to the position of “Chief Officer for New Zealand,” thus establishing the head office for the Colony in that centre. The business in the Colony still rapidly extended. In 1873 an agency was opened at Gisborne, and in the following year a branch at Oamaru. In the report presented 26th of January, 1891, Mr. G. E. Tolhurst is announced as Resident Inspector in New Zealand; and Mr. Palmer, whose long and honourable connection with the Bank at Christchnrch dates from 1859, retired from the position of chief officer and became local director for that branch. Mr. Tolhurst is no stranger to the banking business of the Colony. For many years prior to his acceptance of his present position he was well known as a prominent officer in the Bank of New Zealand. With this change in the head officer for the Colony came the change of head office. The Wellington office of the Bank stands on one of the best sites in the city, at the corner of Lambton Quay and Featherston Street.