OFFICERS CLUB Inc.
representing Officers and families of
The Commercial Banking Company of Sydney Limited
and its subsidiaries & affiliates.
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THE COMMERCIAL BANKING COMPANY OF SYDNEY. A RECORD OF OVER THREE-QUARTERS OF A CENTURY. (" DAILY TELEGRAPH," SATURDAY, JULY 23, 1910.) MOST of our leading financial institutions are Australasian in their field of operations. The Commercial Banking Company of Sydney is not so; its aim all through has been to confine its business to New South Wales and Queensland. True, at the outset of the Victorian gold discoveries it was tempted to open a Branch in Melbourne, but it was transferred immediately to the Bank of New South Wales; and the whole of its operations are in the two eastern States plus the London Office; and the share register is in Sydney only. As to the marked progress of the Bank since its incorporation in 1848; there can be no question. Like the Bank of New South Wales; it was started as a co-partnery, and from 1834 to 1843, when the Bank was incorporated, there were much profits and many troubles, which, indeed, all the Banks in the forties had to face. Still, there has never been a single year since 1835 in which the Shareholders have failed to receive dividends, and for many years those dividends were the highest paid by any bank in Australia-after the Bank had been forty years in .active operation. THE OLD BANK. We have sometimes heard the question raised whether the Commercial of Sydney or the Bank of Australasia is the oldest institution: There were proposals to establish a Sydney Commercial Bank in the twenties, but the public prospectus, as we should now term it,: did not appear until October 24, 1834. That of the Bank of Australasia appeared in London seven months earlier, though it took over twelve months to get the Sydney 'Office started.. Hence the Commercial receives priority in our Australian official records. It does. not matter much; but 76 years ago Sydney was a small, if growing, town, and in the whole State there were only about 66,000 people-though it was significant that even then New South Wales possessed a million merino sheep" and "Botany wool " was making its name known. The following is from the original document placed before subscribers in Sydney in October, 1834:- COMMERCIAL BANKING COMPANY OF SYDNEY. Deputy-Chairman: Captain John Lamb, R.N. DIRECTORS: Thomas Barker | F. A. Hely Robert Scott | J. T. Goodsir Robert Johnston | Jas. Hickey Grose Thomas Marsden | Roger Therry Robert How | Thos. Potter Macqueen Managing Director and Cashier: Leslie Duguid. Capital, £300,000. in 3000 shares of £100 each; £30,000 to be raised by £10 per share, in three instalments. No further calls unless agreed to at a General Meeting. Calls not to exceed £5 per share. "The Directors may appropriate one-tenth of profits to raise a surplus fund to meet contingencies. That fund not to exceed 5 per cent. on the paid-up capital." Fancy such a provision as ,that contained in the last sentence! Did it exist to-day, the reserve fund could only be £75,000, instead of £1,380,000. But' it operated to keep' down accumulations until after enlarged powers were secured. Some profits were capitalised, while in I844-that disastrous. time in this State-its capital was reduced by one-half. The original directorate contained names of mark in Australia.. Captain Lamb, afterwards M.L.C., was long identified with the Bank, and was, in 'fact, first chairman of the incorporated institution in r848. Mr. {afterwards Sir} Roger Therry was a member of the old Legislative Council, Crown Prosecutor, and ,one of the first members of the Senate of the Sydney University. The Chairman, too, was a well-known public man. The following is a list of Directors and Managers of the old Bank :- DIRECTORS: Alexander, John | Knox, Edward MANAGING DIRECTORS: Duguid, Leslie (1834-1847) Knox, Eqward (1847-8). We have only been able to obtain seven of the reports issued by the original Bank, but from the statutory averages (first. half-yearly, then quarterly), published in the Government Gazette, and from other sources it is apparent that handsome- dividends were paid amounting to in all about £215,000. The capital was increased year by, year from about £100,000 in 1836 to £245,000 in 1843, .but was written down in 1845 ; and when in 1848 the new Bank was established, the old capital was, as, inevitable at that time, returned, and ,another capital subscribed afresh. In the boom of 1840 the deposits reached the high figure of £270,000, and the note circulation exceeded £74,000; but the contraction afterwards was general in Australian banking. Mr. Edward Knox became a Director in 1845, and Managing Director in 1847. In the same year the present General Manager (Mr. T. A. Dibbs) entered the service of the old Bank, and has ever since been prominently identified with its growing fortunes. When Mr. Dibbs joined the Bank it had deposits to the amount of £187,000 and now it holds £18,300,000; and it has throughout been a natural growth, for the Bank bas never absorbed any other institution. THE INCORPORATED BANK. It became necessary in the forties to modernise and enlarge the powers of the Bank. But the Directors did not await the slow process of securing an Act of Incorporation (which was secured in 1851), but started the remodelled institution under a Deed of Settlement. In 1851, too (the year of the gold discoveries), Mr. Edward Knox quitted the managerial chair, and became once more a Director of the Bank. The original Directorate of the reconstructed Bank was as follows :- Chairman: John Lamb These were all men of prominence in the country, and three were afterwards knighted. What Mr. Challis did for the Sydney University is well known, and Mr. Smith was the first to introduce steam vessels to Australian waters. From 1848 to 1859 the Directors appeared to take the Chairmanship periodically.. Mr. John Lamb ceased to be a Director in 1852, but during those eleven years Mr. Knox was Chairman twice, Mr. Challis twice, Mr. H. G. Smith twice, Mr. H. W. Parker twice, and Messrs. Robert How, Stuart A. Donaldson, Thos. Barker and Walter Lamb once each. It was a period of very rapid progress. In 1848 the Bank started with £120,000 subscribed capital, but only £71,765 was paid up. In 1852, upon the gold discoveries, when the full £120,000 was paid up, £25,000 additional was capitalised out of profits, and another £50,000 was subscribed. The deposits grew from £148,471 in 1848 to £992,147 at the close of 1853, and the note-issues grew correspondingly; and although there was then a pause, the advance continued steadily in the sixties, .when the deposits were doubled. Indeed, such was the growth of the Bank that the deposits again a great deal more than doubled in the seventies, and again doubled in the eighties. The capital was increased by another £40,000 paid up in 1855, by a further £80,000 in 1859, and by a further £80,000 at £8 6s 8d per share premium per share £25 paid in 1864. Then for a decade the paid-up capital remained at £400,000, while the reserve, was doubled, But in 1874 another £100,000 'was added at cent. percent. premium, while in 1879 yet another £100;000 (making the amount paid up £600,000) was issued to the Shareholders, this time at par, although the market quotation was at that.time about £120 per £25 share. High dividends were paid, and from 1853 to 1893 the lowest dividend was 13 1/2 per cent., in 1857, while from 1876 there was a uniform 25 per cent. paid to the Shareholders, extending over 17 years. Up to 1851 the Bank was situated in George Street (Sargent's have a restaurant on the site), and had no branches. But in that year the Directors "purchased a suitable piece of land at the corner of George and Barrack Streets," whereon "a new and commodious banking house" was erected, and where from 1854 the Head Office has been located. In 1853 the Directors were authorised to open a London Branch, where the sale of gold-dust and their growing exchange business could be properly dealt with (opened in 1859), and in 1855 a Branch was established at 563 George Street South, Haymarket. But it was not until 1859 that the present Branch system was started in earnest. During that year Branches were established at Albury, Wollongong, West Maitland, Queanbeyan, Kiama, Shoalhaven and Maryborough. From that date the Commercial set itself systematically to follow all the arteries of trade in this State. By 1890 it possessed no less than 137 offices in New South Wales, arid in 'all 151 offices, including Queensland and London. After' I893, in common with other Banks, a number of Branches which were non-paying in the long depression which followed were closed. Bur in due time expansion again set in, and at the present date the "Bank has no less than I86 Offices, as 1indicated below:- NUMBER OF OFFICES OF THE COMMERCIAL BANKING CO. - | N.S.W. | Queensland | London | Total. 1850 | 1 | | | 1
THE CRISIS OF I893. The troublous year 1893 found the Commercial of Sydney in a strong and sound financial position. It had not been led away by the land boom, nor had it bolstered up its resources by large bidding for London deposits. Its business was genuinely confined to the two colonies, and was not involved in the Victorian mania. Yet when the crisis came thepublic began to. withdraw their deposits and to hoard gold, and after a crowd of collapses, on May 15, when the Queensland Banks went (there were five stoppages on that day), the Directors decided to protect their depositors who stuck to the Bank by announcing a reconstruction. The Bank at that time had a considerable quantity of gold here, and a further £600,000 coming through the Red Sea, and had the Directors known the effect of the Act passed that day through the New South Wales Parliament, we feel certain they would have held on. Now-a-days many people say the Commercial should have held on. But would they have said the same on May 15. I893? The writer recollects that day well. - There was not much outward demonstration, but it was far .and away the worst day Australia ever had. However, the Commercial of Sydney proved its right to hold its own triumphantly. Its first act was to set free its current accounts, and then followed the fixed deposits, so that in 1895 the position was entirely freed from the effects of the crisis. The Commercial of Sydney was the first Bank in Australia to emancipate itself in that way. Looking back, there are many pleasing recollections connected with that time of distress. The Directors decided to increase the capital by £400,000 (661 per cent.), and the subscriptions were paid up as if by magic. The depositors paid in extensively to their accounts even while the reconstruction proceeded. It was found that there was not only no necessity to draw upon the reserve fund, but a valuation of the assets actually augmented the reserve fund, which should be added to our statement of the net profits below. The extended deposits actually rose to a premium in the market. The whole colony believed in the Commercial, and showed it. When the Bank declares a dividend, three-fourths of it is simply credited to customers' accounts. That 1893 resulted in some changes of policy was natural, and, great as has been the expansion of late years, the Bank could have become a still larger institution but for the conservative policy pursued. Let us illustrate what we mean :- DEPOSITS-AS SHOWN BY THE BANKING AVERAGES.
| Current | Deposits . December quarter, 1892 | £2.423,039 | £8,536,559 Increases | £6.066,498 | £356,524 Thus the growth of the Bank has in this way been centred in the current accounts, and the interest-bearing deposits have actually stood still. The management evidently do not desire to extend the fixed deposits business. On another point there is a difference. The paid-up capital has since 1892 been increased 150 per cent, or by £900,000, and the reserve fund by £600,000, or 60 per cent. There is no longer a desire to pay very high dividends. The Bank is earning 15 per cent. on its capital, and paying 10 per cent. There is another change. The Bank holds large London cash balances, and London is its debtor-not its creditor. DIRECTORS AND CHIEF OFFICERS. Much could be said of those who have had the direction of affairs in their hands. The names of Sir Edward Knox, Richard Jones, G. J. Cohen (the-present Chairman), H. E. Kater, and H. Moses have appeared longest on the directorate, and for very many years the name of Lamb always figured on the list. As for Mr.T.A. Dibbs, he was in the service of the old Bank, and from 1848 to the present time has been continuously in that of the present institution. He was accountant in the fifties, inspector and then assistant-manager in the early sixties; was appointed manager in 1867, the title of General Manager being conferred upon him in 1882. Mr. Dibbs has been no less than 63."years in the service of the Commercial Banking Company, and for 43 years he has been its chief officer. There has been no such lengthy record in the history of Australian banking. During his period of management the balance-sheet has grown tenfold (from £2,293,000 to £22,710,000), the reserve fund more than twelve- fold (from £110,000 to £1,380,000), the dividends paid have totalled £4,809,000; and bonuses have been granted to the staff absorbing £219,000. "Dibbs's Interest Tables" are in general use amongst the banking community. A list of the Directors of the incorporated Bank is below :--- Allan, H. E. A. (1883-87). CHIEF OFFICERS. Knox, Edward (1848-51) It may, in conclusion, be said of the Commercial of Sydney that it has the reputation of treating its officers the best of any Bank in Australia-and that is saying a good deal. Roughly, the current account business in this State may be divided into three parts-one-third being conducted by the Commercial of Sydney, one-third by its next-door neighbour, and the remaining third by all the other Banks. There has never been a year in which the Shareholders were without a. dividend; and, altogether, the Bank has made in its 76 years £6,856,000 net profits, of which £5,727,000 have been divided amongst the Shareholders. The reserve fund bids fair soon to be again on a level with the paid-up capital, and it may be mentioned that its greatest annual profits have accrued in the past 12 months. The Head Office of the Bank in George Street has recently been extensively enlarged, and is a very prominent and handsome building. So, too, are many of the Branches. This article was reproduced in "The Commercial Banking Company of Sydney, Ltd. REPORTS from 1848 to 1910" published by W. E. Smith Limited, 1911
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