To celebrate Auckland’s 175th anniversary, its demisemiseptcentennial, the Weekend Herald continues its series celebrating the growth of the city with a look at people who shaped Auckland. Today, Paul Lewis looks at the link between the city's growth and the ASB, a sponsor of this series.
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They are five words that made even the sturdiest banker quail, especially in 1893: a run on the bank.
Auckland experienced just that when the Auckland Savings Bank, the financial institution most associated with Auckland's growth and community-focused support, was subject to a flood of withdrawals which could have toppled it.
A run on a bank usually sees large numbers of investors all withdrawing funds at once - usually in response to bad news - and can be to the extent the bank fails. In this case, the run on the ASB ended up proving just how stable the bank was, 56 years after its establishment - and just as well.
The ASB has played a strong role in helping Auckland evolve from a colonial outpost to the type of city ASB CEO Barbara Chapman describes as "world-class; a unique Auckland setting". For generations, the bank has helped Aucklanders buy homes and farms and start businesses that have become national and global leaders; it has helped provide amenities which add to Auckland's cachet - like the public library, Aotea Theatre and sponsorships in education, sports and the arts.
But that all looked decidedly shaky in 1893 when all it took to potentially spark a major financial crisis was . . . a woman falling over on the steps of the bank.
The context was a poor business environment at the time and, a few years earlier, the BNZ had been declared insolvent amid allegations of shady dealings between senior management and government officials. The scandal passed and the BNZ was restored to health but the public remained jittery.
On September 1, 1893, according to the bank's own archives, more than £41,000 was withdrawn by customers panicked by unfounded rumours the bank had made bad investments. It doesn't sound like much now but in today's money that would amount to about $8 million (source: Reserve Bank Inflation Adjuster).
The origin of the rumour came, according to the bank's then manager, from a "very eccentric woman named Margaret Sanders, who had been paying in some money to her account. Her odd manner and peculiar dress exposed her to the ridicule of the young. As she was leaving the bank, she was jostled by some larrikins on the doorstep and stumbled on to the pavement. Immediately a large crowd gathered round her."
There had been a recent banking crisis in Australia, a local building society had failed and the Loan and Mercantile Agency Company had been suspended. As the manager said: "all that was needed to occasion a panic was some vague assertion that the bank was connected with one or other of the above institutions and was therefore embarrassed. Rumours to this effect were in circulation, originating, as I cannot but think, in the simple act of a woman falling at the bank door and giving some expression to some want of confidence in the bank's soundness."
Another possible reason for the run was a loud-mouthed city cabbie called Skipper Bowden who claimed, with much fuss, the bank couldn't and wouldn't pay him his savings. No evidence was found to support his claim. Several milkmen were also found to be circulating rumours there was to be a run on the bank.
The damage was done.
That Thursday, a much greater amount of money than normal was withdrawn. Shopkeepers in Victoria St continued the gossip that there would be a run on the bank and Friday brought a small crowd of depositors outside the bank, waiting to withdraw their funds. The bank combated the rumours by printing emergency posters and displaying them throughout the city, the most relevant being the promise that all wanting to withdraw funds would be allowed to do so and that the bank had resources amounting to £549,420.
A panicked crowd during a run on the Auckland Savings Bank in 1893. Photo / NZ Herald Archive
It wasn't the only "run" on the bank the ASB had to contend with. In 1867 the Government, led by Premier Julius Vogel (having ignored Auckland's requests for a savings bank to begin with), saw what was being achieved by the new bank and began moves to introduce the Post Office Savings Bank as a means to taking over.
New Zealand had been borrowing much-needed capital overseas during the 1870s; the funds being gathered at home by the nation's savings banks were tempting. A private member's bill was introduced to Parliament in 1870, supported by Vogel, to take over the savings banks, compelling them to surrender to the POSB. The move was eventually thwarted by the electorate's strong regard for savings banks, with Vogel acknowledging it would have been unpopular with the electorate. That came too late for two banks (in Wellington and Lyttelton) which were absorbed by the POSB.
By the numbers - ASB's Auckland assistance
1906 Auckland Technical College (now the AUT) opens with ASB contributing £10,000.
1920 ASB donates £25,000 to help finance the Auckland War Memorial Museum in the Domain.
1967 £1m advanced to the Auckland public library, plus £300,000 in successive years - £1.6m in total.
A Minhinnick cartoon from the Herald, 1963. Illustration / New Zealand Herald Archive
1971 ASB donates Kashin to Auckland Zoo and contributes to the upkeep of the elephant enclosure.
1980s ASB contributes funding for ASB Theatre in the Aotea Centre.
2000s About $3m advanced to help develop the University of Auckland's Business School.
Today Funding for the ASB Waterfront Theatre in Wynyard Quarter - a key role in the rejuvenation of the neglected waterfront into a thriving business, entertainment and residential district. The bank is also naming rights sponsor of the ASB Tennis Centre and ASB Showgrounds and supports initiatives such as the ASB Auckland Marathon, ASB Polyfest, Lantern Festival, ASB Classic and the Auckland 175th anniversary celebrations.
Embracing immigration
ASB CEO Barbara Chapman. Photo / Richard Robinson
Aucklanders, says ASB CEO Barbara Chapman, need to be more open to immigration - because it is a major plank to continued prosperity.
"It is one of our strengths," says the boss of the bank that has been around for almost all of Auckland's 175 years. "In fact, it's an opportunity.
"I discovered the other day that nearly 40 per cent of Aucklanders today were not born in New Zealand [Census 2013]. More than that, 12 per cent of people living in Auckland today are children of migrants - so more than 50 per cent are new New Zealanders or first generation."
She also found a quote attributed to the 'father of Auckland', Sir John Logan Campbell, profiled in these pages recently. He said: "...the whole and entire objective of everyone here is to make money".
Chapman's point is two-fold: first, we all come from somewhere else, even (and maybe especially) John Logan Campbell and second, Auckland's pursuit of a reputation as a unique and growing commercial centre remains energetic.
But as part of taking the next step, Chapman believes Aucklanders and New Zealanders have to further embrace immigration. Her quoting of Campbell is relevant as he was not only the father of Auckland but also of the Auckland Savings Bank (now ASB) in 1847, close to 170 years ago. He and fellow Scotsman William Brown raised pumpkins and pigs on what is still known as Brown's Island in the Hauraki Gulf as they waited to be able to buy land on the mainland.
Campbell's achievements seem almost impossible; not only did he co-found the ASB, he was a director of the BNZ and NZI, bankrolled the major newspaper, the Southern Cross; was Governor of the province; he became an MP, Cabinet Minister and briefly, mayor of Auckland. He made a fortune from, among other things, what became Lion Breweries and was a renowned philanthropist.
He also profited from his business exploits in shipping, timber, flax, kauri gum and manganese - and gave many of those profits away to charities, including bequeathing Cornwall Park to Auckland.
So Auckland's founding father was an immigrant - and Chapman believes future prosperity hinges, at least partly, on bringing more to Auckland: "That was the origin of Auckland as Logan Campbell saw it - making money. Of course, it is not the only thing we are good at and want to achieve, but it is one of our inherent strengths. It is where it all started a long time ago - and I think we have to change a few things.
"We are at a tipping point for change, really. We all know there are infrastructure, transport and housing issues in Auckland. They can be addressed. It doesn't matter whether it comes from local government or central government but those issues are not insolvable over a period of time.
"We all hear the negative stuff about the traffic jams and net migration helping to push up Auckland house prices. But if you look at the economic contribution immigrants have made - right back to the days of Logan Campbell - it is immense. Immigrants are not an issue, they are an opportunity.
"You can see a lot out of these windows," says Chapman, waving a hand at the windows of the ASB headquarters in the Wynyard Quarter. "There's the fishing boats, restaurants and bars, Team New Zealand's base, parks, there's an innovation hub just down the road, there's a world-class building going up next to ours [the ASB Waterfront Theatre] - and you can also see tourism happening.
"You can see thousands of people in a unique Auckland setting down by the wharves meshing together with thousands more who live here, where the different ethnic groups and cultures exist together quite happily. Immigration has to be a clear road to the future for this city; we just have to manage the opportunity the right way."
People, business and commerce want to come to Auckland because of its uniqueness, Chapman says. Immigrants are drawn by the comparative space and way of life amid generally good weather, a fetching setting and accommodating tax policies.
In the 2014 World Bank Doing Business report, Auckland ranked first globally for the ease of starting a business, for access to credit and protection for minority investors. The city was also was ranked the third most liveable in the world on the Mercer Quality of Life Survey in 2012 and 2013.
"Those are powerful incentives," she says, "and we have to play to them. Immigration is a good thing. It brings capital skills and education into this city and it can only be good for New Zealand. We are only a small country but we have some unique assets, a talent pool and if we have a capital pool that can leverage those assets, that will be great."
