Having organised a group of ladies as helpers, Eliza Darling expanded her philanthropy projects. In March, she set up the Female School for Servants (soon renamed the Female School of Industry), a voluntary organisation to help the daughters of the poor, training them for domestic service and aiming to save them from poverty or prostitution. It took in girls aged between five and eighteen, fed and accommodated them, and provided ‘an education to imbue them with religious ideals and equip them as domestic servants’. The school depended upon donations and the cooperation of willing helpers. Mrs Jane Balcombe and Betsy Abell were readily persuaded to become involved as founding subscribers, along with their good friend Amelia Forbes. They were joined by their new acquaintances Elizabeth Macleay and her daughter Frances (known as Fanny), wife and daughter of the new colonial secretary, Alexander Macleay, who had recently arrived to take up his appointment, replacing Frederick Goulburn.
The admirable Elizabeth Macarthur was another founding subscriber, coming in from Parramatta, sometimes with her young daughter Emmeline, to join the group. Elizabeth was the mainstay of the difficult man described as ‘the father of the Australian wool industry’; in fact, it was she who had managed his pastoral and agricultural estates, supervised the breeding and tending of the flocks by assigned convicts and managed her husband’s business affairs during his eight-year absence in England from 1809 to September 1817 (involved in legal wrangles as part of the defence team for the rebellion against Bligh). Betsy and her mother were doubtless acquainted with Elizabeth already, after their five-month voyage with her eldest son Edward, but now a friendship developed between the women.
The huge Australian Agricultural Company, with a one-million-acre grant in the Hunter Valley, north of Sydney, had been envisaged and passed through the British Parliament because of the energy of John Macarthur. His son in London, John junior, was on the court of directors. Robert Dawson, the Australian manager, later wrote that ‘entire power’ was vested in the Macarthurs, with four family members on the local Australian board of five.17 It may have been because of the Balcombes’ new connections with the Macarthurs that their middle son, Thomas Tyrwhitt Balcombe, aged sixteen in 1826, was given a position.
Thomas went to Port Stephens in the Hunter River region to take up his job with the company. He was a ‘superintendent’, which was not as grand as its title—he was almost certainly appointed to watch over a group of convict labourers or shepherds.18 He had developed a talent as an artist. His supervisory job must have given him much free time and he may have used it to make sketches, of the landscape, convict labourers and groups of Aboriginal people crossing the land. (Later he was to make many portraits of tribal groups ‘up country’.)
But the local Wonnarua people soon discovered that they were prevented from crossing their traditional lands. In 1826, Governor Darling began employing ‘colonial cavalry’—the newly formed mounted police—to ‘disperse’ the Wonnarua people of the Hunter by brutal means to make way for the Australian Agricultural Company’s flocks and herds.19
In Sydney Town the respectable citizens prepared for the King’s Birthday Ball at Government House on 26 April, happily ignoring the fact, as they had every year since his coronation, that he was actually born on 12 August. Governor Darling had invited an assembly of two hundred of the colony’s ‘worth and respectability’, to dance gracefully in the room that Brisbane had used merely for meetings of the Legislative Assembly. William Balcombe, his wife and daughter were among the gathering dancing the quadrille and supping into the small hours, and no doubt they shared the sense of fellowship borne from the two good years just passed.20
But if Sydney’s ‘first two-hundred’ happily danced and dined the night away, it was done against an unease soon to emerge that all was not well with the economy. From the time of Balcombe’s arrival two years earlier, all had been well, with increasing imports of capital and trade goods and ever-expanding levels of investment in Sydney and the countryside. More and more land was surveyed and settled. Sales of wool and timber to Britain were booming. Large-scale land developments triggered a mania for the possession of flocks and herds, causing a scramble to purchase stock and seed, inevitably escalating prices, without proper regard for the ability to repay borrowings. A building boom in Sydney, well underway by the end of 1825, added to the relentless demand for materials and finance, tempting the Bank of New South Wales and other lending agencies to take undue risks, most notably for pastoral development. Few of the new pastoralists understood the unpredictable nature of Australian weather, with its cycles of floods and drought.
Balcombe was a participant in the troubled events both officially and as a private investor, having rushed to stock his 2560 acres at Bungonia; he had also recently paid a 10 per cent deposit on 4000 acres on the Molonglo Plains, and was already transporting sheep and cattle to the land.21 As a consequence, he was soon to fall victim to the first season of drought that he encountered in 1827, the resultant slide in wool yields and income, and pressure on his mortgages. The economy slumped, leaving many settlers stranded.
In this volatile economic situation, Balcombe once again made a serious error of judgement. He believed that he could quietly join his rich new friends by acting as a lender—of Treasury funds—to those Sydney merchants clamouring for cash. He had become aware that his shareholding friends at the Bank of New South Wales, including Captain Piper, chairman of directors, were reaping extraordinary dividends from the practice of discounting bills of exchange. They were paying cash to merchants who were happy to forfeit 10 per cent on money owed to them (i.e. discounted) but not due for weeks or months, so that they could obtain cash immediately. Those at the Bank would wait until the bill was due and then make a healthy 10 per cent profit.
But Balcombe could not know that his ‘banking’ activities would be exposed, as a result of an investigation following a cash crisis, ironically unconnected with him, which confronted the Bank in May 1826. Because of complications arising from the changeover from a mixed sterling and Spanish dollar monetary system and a scarcity of sterling, merchants had exhausted almost entirely the Bank’s holdings of dollars, which they needed to send overseas to pay for imports. On 3 April 1826, the Bank held $122,933, but by 10 May that had been reduced to only $4739.22 Unfortunately, on 13 May the Sydney Gazette went public with an account of the ‘scare’: ‘Tremendous was the stir that was created in the afternoon of Wednesday and the morning of Thursday last by certain evil rumours being indiscriminately circulated that the Bank had stopped payment. It soon spread but the evil was as speedily counteracted.’ But the prompt correction (an injection of government funds) was not sufficient for the resumption of business as usual.23
To avoid risking further public panic, the Bank had sought a loan of £20,000 sterling from the government. As part of an agreement to help the Bank’s directors, Governor Darling ordered an enquiry into the Bank’s affairs to rectify any poor management issues. In minutely investigating the Bank’s deposits and payments, particular attention was given to the deposit account for the Colonial Treasury.
For Balcombe, the investigation was massively prejudicial. On the very eve of the governor’s enquiry, Balcombe had paid into the account $76,743 in Spanish dollars, making a total balance for the Treasury account of $99,465, a third of it in cheques from four major Sydney merchant companies and five individual businessmen.24 He had made the deposits of public revenue on a day when the Bank’s liquidity was seriously in doubt.25
At a meeting four days later, Darling’s executive council directed the Bank to arrange with the colonial treasurer to avoid drawing on the deposit of almost $100,000, except for the immediate needs of the public service, and he was strictly ordered not to withdraw cash. Clearly, any sizeable withdrawal would render the £20,000 sterling cash injection ‘ineffectual’, as Darling put it.26 The governor wasted no time in writing to Bathurst and laying before him all that the enquiry had revealed about Balcombe’s machinations.27
B
alcombe sought to defend himself by arguing that he had never received instructions ‘as to the mode in which I should keep the Public Money’, and that the procedure he had adopted had been practised before when government funds were managed by individual departments. He said that he had deposited the funds in the Bank because there was no secure place to keep government revenue; the alternative had been to keep it under his bed. Further, he had no reason to ‘doubt the stability’ of the Bank, ‘many of the proprietors of which are people of the most extensive property in the Colony’. He added that because he had given ‘such ample security’ before taking up his duties, he considered that he was at liberty to manage the safety of the funds as he saw fit, ‘believing that all that was necessary on my part was the production at a moment’s notice of the money when required for the public service’.28
His response to the charge of lending Treasury money to private citizens and of gaining interest himself from discounted bills was lame. He had obviously hoped that these practices would never be discovered, but tried to defend himself: ‘The circumstances of my having deposited some money for security in the custody of one or two of the principal Merchants arose from the alarm occasioned by the breaking open of the Commissariat Stores and the robbery of a large sum of money . . . and as the money in question could at any time be drawn at the shortest notice, I considered it safer under their custody there than it would have been at my own house in which there is no money vaults to secure it.’29
Balcombe’s defence failed to impress Darling, who advised him, through Colonial Secretary Alexander Macleay, of his ‘decided disapprobation of you having deposited the Public Money either in the Bank or in the hands of private individuals’. He made clear that his belief was that keeping the funds in the Treasury—that is, Balcombe’s house, where an armed sentry was continually posted—would have been equally safe. Balcombe was informed that the matter would be reported to Lord Bathurst.30
On 22 May, Darling sent another despatch to his lordship: ‘It is impossible to account for his having placed this Money in an Establishment apparently on the very verge of Bankruptcy, otherwise than by supposing as it was not forthcoming when the Inspection of the Treasury took place, that his intention was to conceal the fact of his having been in the habit of Discounting the Bills of Private Individuals; hoping, as may be presumed, that the Money appearing to be in the Bank at the time of the examination of that Establishment, that his previous transactions would not be enquired into or discovered . . . Had the Bank failed, Mr Balcombe, no doubt, would have been liable; But he possesses no property and the recovery of the money would, I have no doubt, been found totally impracticable.31 It is my intention, though not authorized by my Instructions, to order the Inspection of the Treasury at uncertain times, and to forbid Mr Balcombe’s lodging the Public Money in the Bank, or making use of it, as he appears most improperly to have done, for his private purposes.’32
Upon learning that the whole matter was to be placed before the Secretary of State, Balcombe’s usual confidence must have deserted him. He would have feared that Darling’s account would be strongly worded, but he would have been shocked to learn how scorching it actually was. He was aware that he would have to wait for at least eight months, in a state of anxiety—while a ship took the despatch to London and brought a response back—to learn if he was to be dismissed from his position and lose his good life. His health began to decline from that time.
The surprise raids on Balcombe’s office, ordered by the governor and executed by Macleay, happened soon enough. In late May, there was a virtual ambush, startling the clerks, Harrison and Wallace.
Once again, Balcombe had managed to fall foul of an authoritarian military governor, and once again it was through his own indiscretions. As on previous occasions, it would be surprising if he had not sent off a hurried letter to Sir Thomas Tyrwhitt, hoping that his protector could intercede with Bathurst to save him from dismissal, if that was contemplated. At the same time, Balcombe must have had misgivings about Tyrwhitt’s reserves of patience, having been pressed into service so many times over the years.
Whatever was said privately in London, in mitigation or otherwise, Bathurst’s reply, received by Darling nine months later, in February 1827, endorsed the governor’s proposals to tighten control over Balcombe’s management of the Treasury. Bathurst went on to state: ‘But I cannot close this despatch without marking, with His Majesty’s strongest displeasure, the conduct of Mr Balcombe in risking the loss to the Publick of so large a Sum, as that which he deposited in the Bank; and I am sorry that I must further observe that, notwithstanding Mr Balcombe alleges in his excuse that he had no other object in this transaction than the desire of placing the money, entrusted to his charge, in a more secure situation, than was afforded by the unprotected state of his own residence, it is but too evident, from your report of the case, that he was actuated by other far less unobjectionable motives.’33
Once Balcombe learned from the governor of the King’s ‘strongest displeasure’, he would have known that he could no longer expect Tyrwhitt to protect him from his own mistakes.34 He had been repeating the pattern, which had emerged on St Helena, of excessive spending on high living and an over-eagerness to be liked and accepted, and he was displaying the same flawed judgement that had made him vulnerable to the manipulations of Napoleon. In the process he had sullied the good reputation he had established in Sydney.
Meanwhile, another scandal was unfolding that would fully occupy the attention of Darling, distress Balcombe, and set all Sydney society upon its ears.
Since his arrival at the end of 1825, Governor Darling had been quietly observing Captain John Piper, no doubt keeping in mind Bigge’s recommendations for a wholesale change in various positions, including transferring the collection of customs and port revenues from the ‘Naval Officer’ to a ‘Collector of the Customs’. At the beginning, Darling had not been immune to Piper’s generous and engaging personality, but he increasingly wondered how he juggled his many roles without detriment to their effective management. Piper was not only naval officer, with its manifold tasks, but also a magistrate, the chairman of the board of directors of the Bank of New South Wales, and involved in Scots Church affairs; further, he had extensive pastoral and business interests. On top of all this, he was a perennial party-giver, hosting the grandest dinners and balls at his splendid mansion, an extravagant way of life that must have caused the governor concern.
Piper’s role as chairman of the board during the period of inadequate management at the Bank of New South Wales, and his obvious intimacy with Balcombe, would have raised Darling’s apprehensions. He must have wondered whether Piper was complicit in Balcombe’s revenue deposits in the Bank at the time of the crisis. Piper had stepped down from the board shortly afterwards.
At the beginning of 1826, Bathurst had written to Darling directing that Bigge’s recommendation should be implemented and the naval officer advised of his new commission as collector of customs. On 21 October, Darling informed Bathurst that before installing Piper he would carry out an inspection of Piper’s management of his office to judge whether he deserved the appointment. Thus Piper, like Balcombe, became the subject of a government raid on his office. The economic historian S.J. Butlin has written: ‘John Piper was also found by Darling’s board of enquiry into the Bank of NSW, to have been operating a similar discounting system, although on a smaller scale than his friend Balcombe. In addition, D’Arcy Wentworth, when Treasurer of the Police Fund was rumoured to have engaged in the practice as well as the proprietors of the Bank, using loans which they then privately employed, undercutting their own Bank’s interest rates!’35
Piper was aware that an even more detailed inspection of his books was about to take place in April 1827. He knew that the officers would discover an appalling deficit of some £12,000 in the naval officer’s accounts, and that his disastrous financial situation would become public. His biographer, Marjorie Barnard, described how he decided
to resolve the situation: ‘He took no one into his confidence, going about as usual, but he made his will and on the eve of the dreaded day invited a number of his closest friends to dinner. After dinner he made an excuse to leave them on official business, pressing them in his usual hospitable way to continue the party without him. He ordered the barge and told the crew, which was also his band, to take their instruments with them. When he had been rowed outside the Heads and the crew had hoisted sail to catch the fresh breeze, he ordered them to play. Under cover of the music he threw himself overboard. One of the crew dived to his rescue but with the lively sea and the strong wind it was some time before his men could get him aboard. He was unconscious when they did, more than half drowned. His return in this state to his friends, who were still keeping up the party, caused a profound sensation. The experience purged the Captain of all desire for suicide and nothing remained for him but to tear up the valedictory letters that he had left for his friends.’36
Barnard noted: ‘The news of the fall of the most popular man in the colony came as a bombshell to the city. There was a loud hubbub in the newspapers.’ His assets all had to be put up for sale at a time when the market was unfavourable; the city properties, the farms, 100 acres at harbourside Vaucluse and Piper’s beautiful Henrietta Villa, ‘its contents, furniture, wine, carriages, horses, boats and guns’, were all sold at auction on 4 June. They went for a fraction of their worth, mainly to ‘the Merchants and shopkeepers of Sydney, the greatest portion of whom are Emancipists’.37
Historian S.J. Butlin has offered a defence of both Balcombe and Piper, on the grounds that they had merely continued practices common enough in individual departments since early times in the colony, after the raffish practices of the founding days were brought into some kind of departmental order: ‘In extenuation, it may be pointed out that officials were still expected to provide their own place of safekeeping, and that the principle that officials holding public moneys were entitled to the perquisite of private investment of the funds held had, within living memory, been officially proper.’38 But as the colony advanced far beyond being merely a gaol, it was clearly time that such buccaneer practices ceased, and that had been one good reason why a Colonial Treasury had been instituted. As for Balcombe’s misdemeanour, according to Butlin, while ‘the episode was itself trivial, it led to significant changes in the colonial Treasury’s potential impact on money supply, by virtue of it now having to hold the “major part” of its revenue holdings in hard cash, which in turn meant it could influence economic activity’.39
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