Obituaries Australia

There have been three great depressions in Australia — in the 1840s, the 1890s and the 1930s. The first big bankruptcies of that first great depression occurred in Sydney towards the end of 1840. Because a cascade of bankruptcies continued through 1841 a new and official Insolvent Office began operating in Sydney in February 1842. The Office handled more than 1900 cases up to 1849.[1] This was a substantial number for a small population. At the census of 1846 only 157,000 non-Indigenous people, men, women, children, convicts, had been counted within the Office's jurisdiction, which was eastern Australia north of the Murray River.[2]

Many people who had insufficient credit to become insolvent became unemployed instead. A group of working-men in Sydney formed the Mutual Protection Association in 1843, which undertook a house-to-house survey across the city, set up an employment office, lobbied the authorities, gained commitments from candidates at the City Council election, and published a weekly newspaper, The Guardian, between March and October 1844.[3]

Caroline Chisholm set up her own employment office in Sydney. Five hundred married men who applied there filled out a questionnaire. “Where there are large families”, she reported, “there are generally one or two children at service; a good number of those persons whose names I have taken down have been subsisting on the wages they have received from their children, and I know many girls who go without shoes or stockings, and have no clothes to go to Church in on Sunday, because they give their money to their parents.”[4]

By 1845 conditions were improving, however, and the number of bankruptcies fell back to an average of about 125 a year for the rest of the decade. It was not until August 1846 that a strike of carpenters and joiners in Sydney, supported by many other trades, sought a return to the pre-depression level of wages; the employers ended the three weeks action by coming half-way, conceding a rate of 5 shillings and sixpence a day, which amounted to 86 pounds a year if the man was employed without a single working day’s break.[5] 

Other parts of Australia, and the embryonic British settlements in New Zealand, were caught up in the same catastrophe. This essay concentrates on conditions within the boundaries of present-day New South Wales, the region which was then the longest occupied by colonists and with the largest non-Indigenous population. 

The  Hungry  Forties
The decade would become known in the United Kingdom as “the hungry forties”. There would not be as severe an economic crisis again in Britain until the Great Depression of the 1930s. The earliest tremor had been felt in 1836 when the persistent international indebtedness of the United States’ economy (because of perennial trade deficits as well as the need to service borrowings and investments from overseas) created a liquidity squeeze in the world’s dominant creditor economy, the United Kingdom. It took until the middle of 1839 before the slowdown turned into a full-blown depression.[6]

Although the price paid for Australian wool imported into Britain had been falling steadily since that preliminary downturn in 1836 more people, merchandise and capital moved optimistically into Australia than ever before. Livestock kept breeding and spread further and further inland.[7] The steep increase in the supply of wool, indeed, was one factor that weakened its price. Very new settlements at Melbourne (1835), Adelaide (1836), Auckland and Wellington, New Zealand (1840) seemed to promise the swift exploitation of vast new territories. By contrast with the gloom at the heart of the Empire the sun shone on Australia. The boom there, of course, would be effortless and endless.

For such shallow and raw economies as those strung out around the Australian and New Zealand coastlines the amount of credit freshly made available was immense. Colonists seized on the funds avidly, which made possible a rush to buy urban and rural land at unsustainable prices. Dr Charles Nicholson, for example, who would be a successful investor until the end of his long life, found himself in May 1840 paying 712 pounds for 23 unimproved acres outside tiny Melbourne that had been sold eleven months earlier for 154 pounds.[8] In the wake of a spectacular Crown land auction in Melbourne in June 1840 businessmen immediately expressed dismay at the sums they had just committed themselves for. They were even more dismayed at the sums paid by other men who were already in debt to them. They spoke about “land mania". Nowadays we euphemistically call it “a property bubble”.[9]

Exporters in Britain overestimated the purchasing power of the growing population. The amount of merchandise sent to Australia glutted the market. By September 1840 local merchants lamented the stacks of unsold imports sitting on the wharf, and their inability to move the stacks on to counterpart merchants in other cargo-logged Australasian seaports.[10]

The ship owner Edye Manning and the international trader Alexander Brodie Spark, directors of the Bank of Australia, had met with the bank’s secretary/cashier, William Henry Mackenzie, between the weekly board meetings of 7 and 14 July 1840 and granted themselves advances of 10,500 pounds.[11] In September 1840 the lawyer and newspaper owner George Robert Nichols attacked “the cross-paper merchants”, by whom he meant bank directors hogging to themselves their institution’s issue of credit. In January 1841 he had singled out John Lamb, chair of the Commercial Banking Company of Sydney. Lamb wished to ignore the accusation but his board insisted that he sue Nichols for defamation. The trial took place in June, as the crisis deepened. A special jury of businessmen and landowners was sworn in. The plaintiff had asked for 1000 pounds in damages but the jury, after half an hour’s deliberation, awarded only one farthing.[12]

The  Grain  Market
The first large bankruptcies in Sydney occurred in October and November 1840. Two different partnerships of flour millers collapsed, plus a grain-trading ship owner. The rumour at the time was that they owed 90,000 pounds, 45,000 pounds and 33,000 pounds respectively.[13] Eastern Australia had been in drought for several seasons, while immigrant ships kept coming.[14] Vessels were sent across the Pacific and Indian Oceans in search of grain, at significant cost. Towards the end of July it was estimated that the current supply would last for little more than two months. Another poor harvest was expected. Working people turned to cheaper maize and rice; it was suggested that boiled rice be mixed with flour for bread-making. Then prospects changed fast. Laden vessels returned, from Launceston and Valparaiso and Calcutta (some with cargoes of inferior quality), and from Norfolk Island with maize.  And a mild winter, with winter and spring rains, brought promise of a bountiful harvest from the extra acres that had been planted under the pressure of drought. Millers now scrambled for custom. By mid-October the wholesale price of wheat and flour was two-fifths the price it had been two months before.[15]

Australian millers and grain traders now experienced acutely the gap between outlay and income already faced by their anxious customers, neighbours and creditors. Barker and Hallen, whose flour mill stood near the head of Darling Harbour, was the largest of the three bankruptcies. On leaving for Britain in 1836 Thomas Barker had handed control of his business to his brother James. He returned early in September 1840 with funds from a trusting investor in Edinburgh, much of which he placed immediately as a mortgage over land along the Hunter River for which James Barker had recently overpaid. About one-third of Barker and Hallen's debt was held by the mercantile partnership of Lamb and Parbury — large importers of grain — whose John Lamb was (as we have seen) chair of the Commercial Bank. The month after Thomas Barker's return he and Lamb engineered the bankruptcy of Barker and Hallen and constituted themselves two of its three trustees, steering its ownership back into Thomas' hands. Meanwhile they secured the resignation of the other partner, the millwright Ambrose Hallen, who found refuge in the home of his father-in-law, William Lawson of Prospect.[16]

As for the grain-trading ship-owner, Robert Anderson (file 00593), who had owed 33,000 pounds, some optimists (including Barker) hauled him before the Insolvent Office at the end of 1842, two years after he had been shaken out the first time. They discovered a mere 40 pounds; "I transferred to Trustees by Deed of Assignment dated 10th October 1840", Anderson wrote, "all my personal property, stock in trade, etc, for the benefit of all my Creditors." One of those creditors had been Barker and Hallen.

Another miller and wharf-owner, Francis Girard (file 00252), postponed bankruptcy at the end of 1840 by selling out to a triumvirate of Thomas Chaplin Breillat, Thomas Gore and Prosper De Mestre, who then traded as the Sydney Flour Company. Gore (as we shall see) met his creditors in 1842, De Mestre in 1843. The Company fell into Breillat's sole ownership, owing 8000 pounds on mortgage to Mrs Mary Girard, so keeping the mortgage out of reach of her husband's creditors (who were to find that he possessed no assets), while guaranteeing the Girard family a regular income through interest payments on the mortgage, an income the Girard's would never jeopardise by foreclosing on the Sydney Flour Company.[17] Girard was able subsequently, in the city street directory, to style himself simply "gentleman".[18]           

The  London  Connection
A number of businessmen in Britain, most of them in London, assembled the swollen freight of merchandise and of migrants that entered Australia at this time, and owned or managed the shipping that carried it all there. They also handled the wool and the whale oil that filled the vessels on their return. In 1836 these men came together in the New South Wales and Van Diemen’s Land Commercial Association, which took control of the wool auctions. The preceding year, in 1835, a broad group of British investors launched the Bank of Australasia (not to be confused with the Sydney-based Bank of Australia), and in 1837 another group, dominated by traders and ship owners, founded the Union Bank of Australia. The banks opened branches in colonial seaports and appointed small local boards.[19]

The British traders expected substantial and prompt remittances for their lavish outlays. Their colonial correspondents were usually relatives or old friends who counted on continual credit from Britain, using it confidently to speculate in Australia, although it was soon evident that they were powerless to halt the decline from 1840 onwards in the resale price of the imports that they handled, to halt the decline in the price of the wool that they dispatched, or to reverse the tumbling price of real estate bought during the land mania.

Early in 1841 the Londoners realised that remittances from Australia were dangerously slow and low. In March John Gore, the largest importer of Australian wool to Britain and a founder both of the Union Bank and of the NSW and VDL Commercial Association, sacked Thomas Gore, his nephew and Sydney agent, who allegedly withheld 125,000 pounds from him, and sacked Michael Connolly, his Launceston agent, as well.[20] A month earlier the London businessman Robert Brooks, another founder of both organisations, had stopped sending goods to his Sydney agent, Ranulph Dacre. Dacre had embroiled himself in ventures across the Pacific, in Hawaii, Tahiti, New Caledonia, the whaling grounds and particularly the timberlands of New Zealand.[21]

Also in February 1841 Jacob Montefiore, second largest importer of Australian wool and a director of the Bank of Australasia[22], declared his London firm to be in "temporary suspension".[23] His brother Joseph Barrow Montefiore took ship from Sydney to London early in April, almost three months before the suspension in business became known in Australia.[24] The brothers had alerted each other to the looming crisis in their affairs. John Gore and Robert Brooks, meanwhile, worked busily to ameliorate, if possible to hide, Montefiore's plight, so as to preserve their own solvency as well as the reputation of the Australian trade in the London money market.[25] Indeed, in that very same northern winter of 1840-1841 the Union Bank, of which they were both directors, convinced (or hoodwinked) the London money market that Australia was the safest of bets by raising significant extra capital.[26]

Montefiore Breillat & Co, the colonial counterpart, scaled back its Sydney and Hobart dealings but did not close down. Thomas Chaplin Breillat put himself forward throughout 1841 as trustee of other men's entangled estates, which retrieved some funds, retrieving them before competing creditors could assert themselves.[27] The extended Montefiore family, intermarried with the Rothschilds, commanded immense financial resources in Britain, which allowed a slow and smooth withdrawal from Sydney, while the specifically Australian venture could draw on the Bank of Australasia. And as Lamb and Parbury had advanced substantial sums to Montefiore Breillat & Co on nine occasions between August and October in 1840 the Commercial Bank presumably helped out too, through its chairman John Lamb.[28] The Sydney firm submitted to bankruptcy at last in 1845 (file 01351), by which time the London house was its major remaining creditor and the accounts between the two entities were largely reconciled. The only sacrifice Breillat (file 01486) himself had to make was the sale of his shares in colonial companies. Joseph Barrow Montefiore returned to Australia in 1846, but to Adelaide where he was to enjoy a noteworthy career. 

There was no soft landing for the Gores. John Gore's exposure to his nephew had been reduced to 20,000 pounds when Thomas was dragged into the Insolvent Office in June 1842 (file 00342), but by then another 173 claimants had come forward, in Britain and in Australia, alleging that they were owed a total of 107,000 pounds. A few paltry dividends were distributed over the years, the final one in 1849, by which this vast array of creditors recovered in all less than one-tenth of their claims. Despite his own setback, however, John Gore decided not to withdraw from the Australia trade. Where else could he rebuild his fortune? George Richard Griffiths, previously inspector for Australia of the Bank of Australasia, became his agent in Sydney and young Frederick Gonnerman Dalgety became his agent in Melbourne.[29]

Robert Brooks was able to keep some control from London over Ranulph Dacre's downfall. Brooks was a director of the Union Bank and James Sea, Dacre's father-in-law, was manager of the bank's Sydney branch. In addition Brooks' friend Captain Robert Towns was given responsibility for handling Dacre once Towns settled permanently in Sydney in 1843.[30] Dacre's public bankruptcy was delayed until 1846 (file 01533). He still owed Brooks 29,000 pounds, and owed another fifty creditors in Australia and Britain a further 25,000 pounds. He had no assets left, apparently, to cover this. He wrote on the official insolvency schedule: "I assigned over in July 1843 to Trustees for the general benefit of my Creditors, all my real and personal estate, the gross sales of which have amounted to about 20,000 pounds." It is likely, however, that he retained assets in New Zealand, beyond the jurisdiction of New South Wales. Auckland is where he spent much of the rest of his life.[31]

Brooks dealt with one Sydney business correspondent independently of his agency with Dacre. Ever since 1823 Robert Campbell junior had received his imports directly from Brooks, and sent wool and whale oil back to him. (This Robert Campbell is not to be confused with two other men of the same name in volume 1 of the ADB — his uncle and his cousin.) Campbell called on his longstanding networks to avoid public bankruptcy in 1843. He negotiated release from debt by payment of five shillings in the pound, retaining relationships at both ends of the voyage that had prospered in the past and that he made sure would prosper again.[32] So solid did he appear to outsiders that, by the very next year, 1844, some directors of the Bank of New South Wales having fallen by the wayside, he was hoisted into the chair of that bank's board.[33]

In turn, early in 1844, John William Gosling handed his business and personal assets into a trusteeship headed by Campbell, likewise avoiding the publicity, humiliation and uncertainty of public bankruptcy. Gosling's partners in Liverpool, England, had quarreled disastrously with each other, while colonial clients like the careless aristocratic squatter Robert Ramsay Mackenzie (file 01250) failed to pay him what they owed.[34] Gosling, like Campbell (and Barker and Breillat), retained his standing in Sydney's business community.

The  Insolvency  Act
Many Sydney-siders were dismayed at the processes, or rather the deficiency in process, by which the assets of declared defaulters had been drained away into the accounts of powerful or well positioned claimants. A committee of merchants, meeting several times in 1841, passed the issue across to the judges, who then met as a body to consider a remedy. The judges revived an Insolvency Bill that had been drafted in 1838 by one of them, William Westbrooke Burton, but not proceeded with at that time. They submitted the bill to the Legislative Council which, until the first parliamentary elections in 1843, was made up of officials and of citizens nominated by the Governor. Governor Sir George Gipps and Chief Justice Sir James Dowling spoke at length in Council about the Insolvency Bill, which passed into law in December 1841.[35]

As a consequence an Insolvent Office opened on the first day of February 1842, located within the Supreme Courthouse and presided over by a barrister, William Henry Kerr, as Chief Commissioner.[36] The Government Gazette announced each bankruptcy and the date of initial and subsequent hearings. Newspapers faithfully copied the information, and often followed up with a list of professed creditors and the amount of their claims, essential news for many readers. The Office printed five sheets, Schedules A to E, on which were to be listed alleged assets and alleged liabilities. A bankrupt was now said to “file his schedule”. Creditors approved a trustee or trustees from among their number, but they worked with full-time receivers, known as “Official Assignees”, who answered to the Chief Commissioner. At least two of the Official Assignees, Clark Irving and Edward Knox, have entries in the ADB. When a determination was agreed on Chief Commissioner Kerr would take it to a sitting of the Supreme Court, usually before Mr Justice Burton. Some people nicknamed the Insolvent Act "Burton's Purge". Some disgruntled people would come to nickname the Insolvent Office "Whitewash Hall".

629 people filed their schedules with the Insolvent Office in 1842 and another 539 in 1843.[37] Two members of the Legislative Council which passed the Insolvency Act would themselves file their schedules — the businessman Richard Jones in 1843 and the squire Hannibal Hawkins Macarthur later in 1848.  

The  Colonial  Banks
The Bank of Australia had been founded in Sydney in 1826 as a self-conscious “Exclusive” antidote to the Bank of New South Wales, which is to say that none of its directors was infected with the convict taint, either directly, by descent, through marriage or by social visiting[38], although it would become less exclusive about whose money it would handle. The clandestine arrangement of advances to themselves in July 1840 by two of its directors, Edye Manning and Alexander Brodie Spark (one of the Bank's founders), has already been mentioned. In February 1843, as the bank was disintegrating, it was revealed that the advances to Manning had grown to 66,000 pounds and to Spark to 44,000 pounds.[39]Spark (file 00877) and Manning (file 01256) were soon after forced to pass through the Insolvent Office.

The bank tottered under even heavier burdens.[40] Samuel Terry died in 1838. His estate was estimated at 250,000 pounds. The estimate was struck during the period of swiftly inflating asset prices. It was also the estimate propagated by Terry’s heirs, his sons-in-law John Hosking and John Terry Hughes, who would usually operate in tandem. By presenting themselves as the richest men in Australia they were able to buy and, paradoxically, to borrow on a massive scale. They also lent money far and wide. Hughes and Hosking's names appeared on the creditor side of many bankrupts' schedules. The Sydney Morning Herald reflected in rueful retrospect: “There were few men of business in Sydney who did not feel to some degree that the whole colony (commercially speaking) walked about on the four legs of Hughes and Hosking.”[41] The Bank of Australia strove to monopolise their custom. When the bank tried to call in its advances to them to cover bad debts owed by lesser men it found there was little or nothing there. The bank closed its doors in March 1843. When both Hosking and Hughes filed their own schedules later that same year the bank argued that the former owed it 117,000 pounds and the latter 154,000 pounds. Hughes’ estate was not cleared until 1846, paying only one pound for every forty claimed (files 00916, 1916). Hosking’s case dragged on until 1851, declaring a dividend of one pound in eighty (files 00917, 00953, 00954).

Archibald Mosman (or Mossman, file 00977) was one person who entangled himself inextricably with Hughes and Hosking. The three men had entered what had seemed to be a mutually lucrative agreement, registered in the Supreme Court, whereby Mosman received an annuity of 2000 pounds on the security of some of his real estate. He owned land in Parramatta, Botany and the Hunter valley and particularly along the northern shore of Sydney Harbour where his whaling station was located. Hughes and Hosking became an empty shell in Winter 1843, and Mosman could not avoid collapse in Spring. It was found that he was deep in debt to investors in Scotland and to Scots-born international merchants in Sydney. His colonial creditors lodged an expensive action against the Bank of Australia in the vain attempt to retrieve the land surrendered to the bank in the implosion of Hughes and Hosking.

Hannibal Hawkins Macarthur of The Vineyard, outside Parramatta, had occupied the chair of the Bank of Australia since 1835. Directors Dr James Mitchell, William John Dumaresq, Colonel Thomas Shadforth, John Coghill of Braidwood and Dr F. L. Wallace were landed or professional men. Manning and Spark were businessmen but the businessman-director Thomas Walker responded to the depression by abandoning international trade for the dignity of estate ownership. Director James Norton was (and would remain) the city’s busiest corporate lawyer. W. H. Mackenzie, the bank’s compliant cashier, was Norton’s brother-in-law. 

A lottery was mooted in 1844 to dispose of all the real estate held as security by the Bank of Australia. But the Sydney branch manager of the London-based Bank of Australasia had earlier tried to take control of the Bank of Australia's swollen loan book in return for advancing a total of 176,000 pounds to the tottering colonial bank. After two long court cases in Sydney and a delayed judgement in favour of the Bank of Australasia by the Privy Council in London the way was clear to draw the lottery on the first three days of January 1849.[42] In the preceding year the bank’s former chair, Hannibal Hawkins Macarthur, filed his schedule at the Insolvent Office (file 01794).

The chair of the Sydney Banking Company, George Miller was the Bank of Australia’s most persistent and forensic critic.[43] Immediately the Bank of Australia failed the Sydney Banking Company thoroughly investigated its own solvency. The Sydney Bank had formed late in 1839, at the crest of the boom.[44] Its directors had not borrowed a great amount from it, but in 1843 they found that the manager, Thomas Lord (file 01276), the accountant, Henry Montague Cockburn (file 00742), and the clerical staff had drawn on it heavily and had provided totally false accounts to board meetings by which they covered their tracks. The bank was wound up forthwith. One of its directors, Thomas Ware Smart, oversaw several years of painstaking repayments so that when the books were ruled off in 1847 he declared that only one-eighth of its liabilities had not been returned.[45]

The Commercial Banking Company of Sydney (founded in 1834) reduced its activity severely as the crisis continued. Perhaps the contemptuous award of a single farthing when the chairman, John Lamb, sued for libel shocked the board into utter caution. The bank came through the depression diminished but intact.[46] Its insolvent directors were John William Gosling, William Henry Moore (file 00836) and Joseph Hickey Grose (file 00947). But in 1847 it became known that the managing director, Leslie Duguid (file 01662), and the accountant had survived the depression by embezzling between them more than 10,000 pounds from the bank.[47]

The Bank of New South Wales, the oldest such institution in the city, struggled through the crisis. Richard Jones had presided over the Bank of New South Wales since 1828, and had been placed in 1829 on the Legislative Council by Governor Ralph Darling as the mercantile representative. He chaired most business committees that he chose to join. One of these was the Australian Auction Company, formed at the height of the boom late in 1839, which the financial journalist Trevor Sykes, in Two Centuries of Panic (1988), settled on as the case study of scandalous behavior in the 1840s. Its board walked away from it and its debts in 1842. Eight of its directors were, or soon would be, bankrupt.[48]

Because of Jones’ tardiness in remitting proceeds his London supplier, Stuart Donaldson, had sent out his son Stuart Alexander Donaldson in 1836 to manage and then take over the Sydney-London connection. Jones retired from day-to-day trading, except for the importation of tea and sugar from one of the two great British firms in China, Dent and Co. When payment from Sydney to China dried up Dent and Co in 1842 sent young William Fanning to remove and replace him. At their first meeting, Fanning wrote, "the poor old man was totally upset, his eyes filling with tears more than once, and alternately swayed by feelings of regret and indignation, he indulged in the metaphor of a town dependent on one pipe for a supply of water, suddenly deprived of its support .....".[49] Jones was forced to file his schedule in November 1843 (file 01023). 

It was found that hanging on to other people's money was habitual. James Stevenson for example, manager of Fleurs, Jones' fine farm at Kemp's Creek west of Parramatta, alleged that he was paid spasmodically, and submitted an itemised account as evidence that he had received only three-fifths of the salary agreed upon when he began in 1836. All four colonial banks, and the two London banks, lodged claims, as did three insurance companies. Questions were still being raised in 1850 and 1851 (the year Jones died) about a final settlement.

The merchant Prosper De Mestre (file 00876) had been a director of the Bank of New South Wales for at least as many years as Jones had, and he was similarly indebted to all of the banks. His greatest extravagance was the accumulation of Sydney town lots. A century later, in 1940, the Registrar in Bankruptcy sold the very last skerrick of his estate, De Mestre Place, a cul-de-sac off George Street near Hunter Street, at auction for 50 pounds. The businessman died in 1844, the year after he filed his schedule; his widow Mary Ann was permitted to retain Terrara, land beside the Shoalhaven, where her son, Etienne Livingstone de Mestre, would raise the winners of the first two, and three subsequent, Melbourne Cups.

Family  Intervention
Elizabeth Macarthur and her sons James Macarthur and William Macarthur owned or squatted on some of the most productive land in the colony, accumulated over fifty years. Although this would provide a buffer in hard times James Macarthur nevertheless shared the ambient optimism, using up the 10,000 pounds dowry he had brought from London in 1838 with a bride from a rich banking family, and drawing heavily on the Bank of Australasia in 1841.[50] Yet when Dr James Bowman, who had married Mary Macarthur, could not handle his own debts his wife’s brothers, James and William, were able to take charge of the sale of Lyndhurst, the Bowmans’ recently built mansion in Glebe[51], and secured the Bowmans’ retirement to Ravensworth, the estate in the Hunter valley that the couple were enabled to retain. So Bowman was saved from passing through the Insolvent Office.

When Alexander McCleay lost his position and salary as Colonial Secretary in 1837, his harbourside mansion, Elizabeth Bay House, neared completion but was burdened with debt. He had reached Australia only in 1826 so, unlike the Macarthurs, he was still paying for his rural properties and livestock. He avoided public bankruptcy because his oldest son, William Sharp Macleay, arrived in Sydney in 1839 with substantial capital. In return for bailing out his father he took control of Elizabeth Bay House, evicted his parents and lived there himself.[52]

In 1843, during the depression, Terence Aubrey Murray married Mary Gibbes, daughter of John George Nathaniel Gibbes, the Collector of Customs. Whether because of prior financial help from the Gibbes family, or as a prudent protection against the future claims of creditors, Murray transferred Yarralumla and some other land into his wife’s name. Mrs Murray died in 1858 and the Gibbes family moved Murray out of Yarralumla, and moved in themselves as her heirs.

The entry in the ADB on John Edye Manning (file 00123), registrar of the Supreme Court and curator of intestate estates, records his appropriation of funds held in trust through the second of those offices, blending them with his own salaried income. He took advantage of the fact that the next of kin of intestate estates who lived overseas would be ignorant of, or unable cheaply to establish, their likely right to inheritance. The judges, under whom he held both of his positions, pressed him for restitution once his frauds became apparent.

Private creditors pursued him too. Young Thomas Sutcliffe Mort, for example, clerk in J. W. Gosling's employ, acted for a man in Bathurst NSW and for another in Great Swan Port VDL to whom Manning had issued 9 and 4 promissory notes respectively totalling almost 6000 pounds. Manning’s son, the businessman Edye Manning, tried to spirit his father’s real estate away from all claimants in the very week that the Insolvent Office opened, by arranging for the sheriff to auction the properties which he then bought himself for tiny sums. If any mortgage, by mischance, might be foreclosed on one or other purchase Manning junior would be able to count on his established practice as director of the Bank of Australia to receive limitless credit. The judges, collectively and aghast, ordered the sheriff not to transfer the title deeds (the sheriff obeyed), thus nullifying Edye Manning’s ploy. Exactly one month after the auction, on 4 March 1842, the father, John Edye Manning, was forced to file his schedule.

Edye Manning (file 01256), the son, faced his own reckoning once the Bank of Australia was stripped bare. The British Colonial Bank and Loan Company, for instance, was formed in London when Australia still looked golden and opened its Sydney office in 1841 with a local board of four, of whom Manning was one. Lending on the security of real estate became its main business. Among the properties which fell into its hands by subsequent foreclosure was "the commodious store in Queen's Place, lately in the occupation of Edye Manning Esq".[53] The claim made against him by the defunct Bank of Australia dwarfed all others. It came to 67,857 pounds 18 shillings and sevenpence. A lawyer briefed by the Bank's liquidators appeared before the Chief Commissioner of the Insolvent Office in October 1844. The barrister urged that Manning be compelled to tell the truth about his dealings with the Bank, which had already seized properties, valued (by the borrower) at 35,000 pounds, that had been nominated over the years as backing for some of the advances made to Manning. The Bank's accounts were in such a mess, however, that the barrister could not present hard evidence from his own side. The Chief Commissioner dismissed the petition and the next week granted Manning his certificate of discharge from bankruptcy.[54]

Once John Piper (file 00700) retired to Alloway Bank just outside Bathurst in the late 1820s he would continue, on a smaller scale, the hospitable conviviality that had swallowed so much of the funds that he had previously handled as Collector of Customs, the misstep that had led to his dismissal back then and to the loss of his mansion on Point Piper. A new generation of creditors foreclosed on him in April 1843. All of his rural properties carried mortgages, one of them held by his son, John Piper junior. But the younger man was also comprehensively mortgaged. He filed his own schedule (file 00731) one month after his father, owing in particular large sums to Francis Lord of Bathurst, merchant, landowner and (later that year) the local member of parliament. Neither father nor son could save the other.

For the Scott family matters panned out a little differently. The bankruptcy of Robert Scott (file 01782), grazier of Glendon along the Hunter riverbank, occurred in May 1848 and drew his brother, Helenus Scott (files 01779, 01781), also of Glendon, into the Insolvent Office simultaneously. The odd thing was that Robert had died in 1844. He had been dead almost four years when the Australian Trust Company called in its loan of 10,000 pounds, made in 1841 with Glendon as security. No interest had been paid. The amount due had blown out to 13,812 pounds. Robert and Helenus were equal partners as owners of Glendon. Robert had not married so Helenus was fully liable as his brother's survivor and heir.

What had Robert done with this money? He used part, if not most, of it to lend in turn on mortgage to desperate men around him. His trustees' report to the Insolvent Office in 1850 of Robert's remaining assets asserted that his estate had not yet foreclosed on the properties of eleven borrowers, at 32,600 pounds in total.

Robert Scott had been a relentless creditor. One man, at least, he had placed in debtors' prison, for the sum of 291 pounds (Roger Murphy, file 00903). The documents surrounding the failure of Alfred Ward Stephens (file 00422) are particularly revelatory. During the 1830s Stephens edited and half-owned the Sydney Herald where he vociferously supported the grazing interests and the Hunter valley gentry in particular. At the height of the land mania he sought to join the Hunter valley gentry himself by buying Puen Buen, near Scone, with its livestock, from John Bingle, and about 8600 additional acres around Dart Brook. He also entered a business, George Rust and Co (file 00218), butchers and cattle dealers, whose liabilities were later estimated at 9989 pounds and whose retrievable assets were almost nothing at all. Robert Scott said the butchers failed to pay him for more than 4,000 head of cattle delivered to their door.

In September 1841, while establishment of an Insolvent Office was still being debated, four men took full possession of Alfred Ward Stephens' affairs, selling his stations and livestock at auction three months afterwards. The two who called themselves Stephens' "trustees" were James Hartwell Williams, merchant and American consul, and Robert Scott. Their two colleagues were Williams' business partner James Kenworthy and Dr James Mitchell, husband of the Scotts' only sister. It seems that most of the lots at the December auction were bought by these four men, using William Henry Mackenzie, cashier of the Bank of Australia, as their bidder in the room. James Mitchell was a director of the Bank of Australia.

One of the eleven mortgage deeds still supposedly held in 1850 in Robert Scott's name, involved one of Stephens' properties. Another deed, face value 1500 pounds, covered 500 acres at Cabramatta, the Horningsea estate owned by Joshua John Moore (file 01045) who had passed through the Insolvent Office late in 1843. When the mortgage against Moore was presented belatedly to the Insolvent Office on Helenus Scott's behalf in 1854, with a claim for unpaid interest of a further 1500 pounds, the Commissioner agreed that the land should be handed across in settlement. According to the report from 1850 in Helenus' insolvency file Robert Scott had also advanced money on mortgage to two of his brothers, Patrick and David Charles Frederick Scott, and to his brother-in-law James Mitchell. This is puzzling. Earlier proceedings, in 1848, recorded the brothers and brother-in-law as Helenus' creditors to roughly the same substantial amounts, which had prompted the Commissioner at that time to install Mitchell and D. C. F. Scott as two of the three trustees of Helenus' affairs. So members of the family were conceded legal oversight of the family's future.

Overview
In 1839 the Bank of England raised the Bank Rate, the rate at which it discounted bills from financial institutions, to an unprecedented 6 %, in response to a deeply troubled economy. Out in Australia at that time, however, bank deposits earning 10% and dividends for shareholders in the mid-teens were signs of unbridled hope, not of precaution. Money, it was believed, could earn twice as much or more in the colonies.

The euphoria did not last. "Land mania" exhausted itself. Inflowing merchandise glutted the market, which could only be cleared by sales well below invoice. The distance between London and Sydney meant that cargoes in either direction travelled on very long credits, while the blithe expectations of colonists had amplified greatly the normal domestic reliance on deferred payment. As prices deflated debts began to be called in, urgently. An import-export merchant, for example, would insist that a retailer settle accounts, the retailer would hurry up a customer, the customer would hunt for any sum owing to him (which might turn out to be a "bad debt" against the name of someone already or soon to be insolvent). Or a master tradesman who had done work for a sudden bankrupt would pass the default in a cascade to sub-contractors and wage labourers, to suppliers of materials, to his landlord, grocer, butcher and tailor, to newspaper owners for a subscription and advertising and to a solicitor for legal help. To alter the metaphor, bankruptcy was a ricochet.

The Insolvent Office was invented to identify debtors and their creditors in open court, to resolve what amounts were recoverable and to divide the residue among the claimants. Once the Commissioner decided that all remedies had been exhausted he advised one or other of the judges to permit the defaulter to resume, however unsteadily, an everyday life. 

Other  ADB Lives  That  Passed  Through  The Insolvent  Court,  1842-1845 
Raphael Clint (file 01601);  Robert Dawson (00461);  Robert Dixon (01252);  Cyrus Matthew Doyle (01298);  Daniel Egan (00933); William Gore (00693);  Edward Smith Hall (01474);  Joseph Jehoshaphat Harpur (00249);  George Hobler (00696); Mortimer William Lewis (01990);  Edmund Lockyer ((01270);  John Lynch (01115);  Isaac Nathan (01210);  George Robert Nichols (00349); Richard Rouse (01197);  Joseph Simmons (00789, 00819); Benjamin Singleton (00006);  Charles Tompson junior (00888);  Thomas Braidwood Wilson (01401).

Footnotes
The file numbers in the text are those attached to the bankruptcy records of each person brought before the Insolvent Office. The files are to be found collected as "Insolvency Index, 1842-1887", record series NRS 13656, State Archives of NSW.  Many of the files have been digitised recently, so can be viewed comfortably at home.

This essay builds on two previous, extensively footnoted, essays of mine: "Prosperity, Prostration, Prudence: business and investment in Sydney, 1838-1851", in Alan Birch and David S. Macmillan (eds), Wealth and Progress; studies in Australian business history (Sydney 1967), pp. 51-76;  "The 1840s Depression Revisited", Australian Historical Studies, no. 101, October 1993, pp. 589-607.

The footnotes below identify sources not cited in my articles, and information not contained in the relevant Dictionary entry or in the relevant insolvency file. 

[1] S. J. Butlin, Foundations of the Australian Monetary System, 1788-1851 (Melbourne 1953), p.b323.

[2] Ralph Mansfield, Analytical View of the Census of NSW for the Year 1846 (Sydney 1847); Wray Vamplew (ed),Australians: historical statistics (Sydney 1987), p. 26.

[3] Terry Irving, The Southern Tree of Liberty (Sydney 2006), chapters 7, 8.

[4] Caroline Chisholm, evidence 4 November 1843, before the Select Committee on the Petition from the Distressed Mechanics and Labourers, Votes and Proceedings, NSW Legislative Council, 1843; Caroline Chisholm, evidence 27 August 1844, before the Select Committe on Distressed Labourers, Votes and Proceedings, NSW Legislative Council, 1844..

[5] Sydney Morning Herald (hereafter SMH), Advertisement (hereafter Ad) 14, 21, Ad 26 August 1846, 5 September 1846.

[6] W. T. C. King, History of the London Discount Market (London 1936); Stephen Quinn, "Money, finance and capital markets", in Roderick Floud and Paul Johnson (eds), The Cambridge Economic History of Modern Britain (Cambridge 2014), pp. 161-167.

[7] B. Dyster, "Prosperity...  ", pp. 55-57; Vamplew, p. 26; Frank Broeze, Mr Brooks and the Australian Trade: imperial business in the nineteenth century (Melbourne 1993), chapter 7; Robin Haines, Emigration and the Labouring Poor (New York 1997), p. 261.

[8] Grant 10 May 1839 and sale 9 April 1840, item 3, Sir Charles Nicholson Papers, A5323, State Library of NSW

[9] Donald S. Garden, Heidelberg: the land and its people, 1838-1900 (Melbourne, 1972), pp. 8-26.

[10] B. Dyster,"The 1840s Depression Revisited", p. 605 and footnote 57.

[11] SMH, 8 September 1843; George Miller, printed letter to solicitors of the Bank of England, 1 October 1846, in WS Macleay Miscellaneous Papers, held in the Macarthur Papers, A4313, State Library of NSW; Graham J. Abbott and Geoffrey Little (eds), The Respectable Sydney Merchant: AB Spark of Tempe (Sydney 1976), pp. 149-174.

[12] Australian (hereafter Aust) 8 September 1840, 14, 19 January, 10 June 1841.

[13] SA Donaldson to James Graham, 7 November 1840, Donaldson Papers, A729, State Library of NSW; George Blackett, insolvency file 00201; James Dodds, insolvency file 00575.

[14] Joelle Gergis, Sunburnt Country: the history and future of climate change in Australia (Melbourne 2018), pp. 76-77.

[15] Sydney Herald, 31 July, 19, 24 August, 16 September, 5, 7, 10, 17, 24 October 1840.

[16] Sydney Herald, Ad 22 December 1840; trial of Barker and Norton, SMH, 25, 28 March, 1, 8 April 1848.

[17] Free Press and Commercial Journal (Sydney), Ad, 6 January 1841; Thomas Chaplin Breillat, insolvency file 01486.

[18] Francis Low, The City of Sydney Directory for 1844-45 (Sydney 1844), p. 48, "Gerrard, Francis".

[19] Butlin, pp. 258-274; Broeze, chapters 5, 6.

[20] Aust 27 June 1840, 11 July 1842; Broeze, p. 61, chapters 5, 6, pp. 161-162, 177.

[21] Broeze, chapter 9.

[22] Aust, 27 June 1840, 11 July 1842; Broeze, pp. 61, 93.

[23] Aust, 29 June 1841; Sydney Monitor, 30 June 1841.

[24] Colonial Times (Hobart), 23 February 1841; Sydney Monitor, 19 March 1841; Sydney Herald, 7 April 1841.

[25] Sydney Herald, 2 February 1842; Broeze, pp. 160-161.

[26] Butlin, p. 305.

[27] Sydney Herald, 16 February 1841 (estate of Charles Frederick Warne); New South Wales Government Gazette, 12 March 1841 (estate of Tom Winder Campbell), 5 November 1841 (estate of Thomas Urmson Ryder, estate of John Gunn Collins).

[28] Aust, 14, 19 January, 10 June 1841; David Rebeiro Furtado and Thomas Chaplin Breillat, insolvency file 01351

[29] Broeze, pp. 161-162, 176-178.

[30] Broeze, pp. 164-170.

[31] Frank Rogers, "Ranulph Dacre", Dictionary of New Zealand Biography (1990).

[32] Broeze, pp. 30, 166.

[33] Low, Sydney Directory... 1844-45, p. 131.

[34] Robert Ramsay Mackenzie, insolvency file 01250; Janette Holcomb, Early Merchant Families of Sydney (Melbourne 2013), pp.177-181.

[35] Sydney Herald, 9, 10, 16 September, 7, 12 October, 17, 18, 22 December 1841.

[36] Sydney Herald, 6 January 1842.

[37] Butlin, p. 123.

[38] Sydney Gazette, 8 February, 1, 8, 11 March, 29 April, 5 July 1826; Butlin, pp. 195-196.

[39] SMH, 31 March, 8 September, 3 October 1843; Butlin, p. 347.

[40] letter from George Miller (Sydney, 8 January 1846) to Robert S. Rowcroft (Lincolns Inn), printed in SMH, 9 January 1846.

[41] SMH, 16 August 1845; Gwyneth M. Dow, Samuel Terry: the Botany Bay Rothschild (Sydney 1974), pp. 224-241.

[42] Butlin, pp. 349-354.

[43] SMH, 4 May 1843, 8 January 1846.

[44] Sydney Herald, 25, 27 December 1839; Butlin, pp. 277-278.

[45] SMH, 5, 8, 19, 26 June, 13, 25 July 1843; Butlin, pp. 360-362.

[46] Butlin, pp. 368-369.

[47] SMH, 26 June, 14 July 1847.

[48] Trevor Sykes, Two Centuries of Panic: a history of corporate collapses in Australia (Sydney 1988), chapter 2.

[49] William Fanning, "Day Book", 17 March 1842, MS 11,841, Guildhall Library, London, quoted in Barrie Dyster, "The Rise of William Fanning and the Ruin of Richard Jones", Journal of the Royal Australian Historical Society, vol 67, part 4, March 1982, p. 367.

[50] John Manning Ward, John Macarthur: colonial conservative, 1798-1867 (Sydney 1981), pp. 85-91, 156.

[51] Barrie Dyster, Servant and Master: building and running the grand houses of Sydney, 1788-1850 (Sydney 1989), chapter 7.

[52] Dyster, Servant and Master, pp. 6-8, 35-38.

[53] SMH, 6 June 1843, Ad, 16 October 1844; Butlin, pp. 309-311.

[54] New South Wales Government Gazette, 21 May 1843, 2 July 1844; SMH, 8 September 1843, 31 May, 8, 12 June, 24 July, 4, 10 24 October 1844.