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Produced and published by the School of Historical & Philosophical Studies, The University of Melbourne
Published July 2008
Published July 2008
Partners
These institutions formed the backbone of the commerce of 19th-century Melbourne which, after its foundation, grew into a port town and, in Alexander Sutherland's words, 'an essentially commercial settlement'. From the beginning, merchants formed one of the principal groups in Melbourne.
The pioneer merchants in the 1830s and early 1840s (whom the journalist Garryowen distinguished from 'mere' shopkeepers) were either agents for London or Sydney firms, or men trading on their own account. They consigned wool to London, made advances to squatters and usually imported goods for their clients and other colonists to buy. They were part-financial agent, part-export agent, part-wholesale importer. Thus James Graham advertised that he was 'prepared to make liberal advances on wool to be shipped to the London markets - and to enter into arrangements with settlers for the furnishing of supplies'.
The major merchants thus filled one of the roles of the banks which at this time were either non-existent, weak or limited in action by the terms of their charter. It was merchants rather than banks who lent to pastoral clients. They provided credit and enabled the squatters to pay wages and buy supplies. The bills of exchange issued by merchants became a form of currency, especially when formal currency was in short supply. In the absence of a manufacturing industry, merchants were responsible for the importing of many necessities of life and all its luxuries - everything from tea, coffee, spices, spirits and wine, to clothes, furniture, silverware, china, glass, timber, slate and machinery.
The pioneer merchants formed the Commercial Exchange (1841); the Melbourne Auction Co. (1840); and the first Chamber of Commerce (1851). While the first depression (1842-44) swept away many of the early merchants and their organisations, a few survived. Chief among the early men were F.G. Dalgety (founder of the pastoral house); J.B. Were (who moved to stockbroking); Captain George Ward Cole (who built Cole's Wharf); James Graham (at his death the senior surviving merchant and compared with Bismarck by Isaac Selby); Richard Grice (principal of what later was known as Grice, Sumner & Co.); and perhaps the most interesting of all, William Westgarth (historian, public figure and politician). In the late 1840s and early 1850s a few new mercantile houses established themselves in Melbourne, such as Fanning, Nankivell & Co. and James Henty & Co.
With the discovery of gold, the great increase in population and the consequent increase in expenditure and consumption, there was a corresponding expansion in the number, character and size of the mercantile houses. The 1850s merchants included Americans (such as G.F. Train, S.P. Lord and Andrew Newell), and Germans. The Chamber of Commerce developed into an important pressure group: free trade in thought and opposed to an export duty on gold. The Chamber campaigned for reduction of tariffs and in 1852 these were limited to wine, spirits, tobacco, tea and coffee. The merchant houses served not only Victoria and Riverina but, increasingly, the other colonies.
Some mercantile houses (such as Dalgety, Hastings Cuningham) continued to specialise in the pastoral area and provide finance to pastoralists. As pastoral houses (along with Richard Goldsbrough and his partners), they formed a separate grouping among the merchants and became public companies as their need for finance grew. In this area banks also increased their activity after changes to their charter. Another important group was the tea merchants; by 1880 Melbourne was a centre for the tea trade, second only to London. Among the principal houses were Robert Harper & Co., and Atcherly & Dawson. A third important commodity was sugar. Melbourne merchants were among the founders of the sugar industry in Queensland and Fiji, with extensive interests in plantations. (George Crespin was known as the king of the sugar market.) They provided the capital and held shares in the Victorian Sugar Co.'s refinery at Yarraville and in the New Australian Sugar Refining Co.
The mercantile houses comprised the principal representatives of the much larger merchant group, and were distinguished by their size, volume of business, stability of credit, reputation and age. They were usually partnerships, and often family businesses. While a hardy few dated from the 1840s, most were established during the 1850s. Only a minority of such houses survived into the third generation. They had their own quarter in the western end of the city, near the Customs House, the bond houses and the docks. There they built their warehouses, a few of which survive today though used for other purposes. The principals of the mercantile houses had 'no peers in wealth, power or reputation', with their mansions in the suburbs and membership of clubs. Some of the principal ones joined the Melbourne Club; they were largely represented in the brief-lived Union, the Athenaeum and the Australian.
Melbourne was the centre of a large re-export trade to the other colonies, making it the mercantile heart of the continent. The partners of mercantile houses held pastoral interests in all the colonies, thus increasing their power and stake in the country. In the period 1860-80 the merchants formed a substantial group in Melbourne. Politically their influence was perhaps gauged more by individual members than as a group. Most were free trade in sympathy but resigned themselves to protectionism. (Captain Ward Cole was unusual in his support for protection.) The more conservative members were elected to the Legislative Council, along with a few pragmatists like James Henty. Individuals who distinguished themselves politically were usually supporters of the protectionist ministries and included three premiers in William McCulloch, James Service and J.G. Francis. Other leading merchant-politicians included Frederick Sargood and Robert Reid.
It was also common for merchants to act as honorary consuls for foreign countries. Merchants were well represented among supporters of the churches, especially the Presbyterian (probably the richest church) and the Church of England (where Richard Grice was a notable benefactor). The most substantial philanthropist was Alfred Felton, the bachelor who left his large estate in trust. The Felton Bequest income was crucial in making the National Gallery of Victoria such a leading institution. Through the Chamber of Commerce, merchants were represented on the Melbourne Harbor Trust and the Marine Board; and the Chamber pressed for better port facilities, railway goods-yards, wharf storage and improved telephone services.
From the mid-1880s merchants generally were under increased pressure and competition. Agents were able to operate more economically in smaller quarters; local manufacturers pressed for higher tariffs (relations between their Chamber and the merchants had always been tense). After the bank and financial crash the re-export trade began to decline and Sydney began to assert its supremacy over Melbourne. Some mercantile houses which had become public companies went bankrupt and others narrowly escaped insolvency (such as Balfour Elliott).
The leading merchants responded by diversifying. Some turned to manufacturing. Robert Harper established a factory to package eastern goods; James Siddall (spice importer) manufactured culinary essences; George Stevenson and F.T. Sargood, softgoods merchants, set up clothing factories; Alfred Shaw, hardware importer, made stamped tinware; Gavin Gibson, boot and shoe importer, founded one of the largest boot factories in Victoria. Others concentrated on their pastoral interests.
With the introduction of a primage duty and general decline in trade, the mercantile houses were subject to intense pressure. Year after year in the 1890s houses closed their doors. By 1897 one observer estimated that half the merchants had gone out of business. The hardier survivors - firms such as Parbury Henty, Langdon (still in existence), and Felton Grimwade - continued to trade and maintained their name and reputation until well into the middle of the 20th century.